Brexit and the Impact on the UK’s Gas and Oil Industry
The UK’s vote to leave the European Union (EU) will have varying impacts on the country’s main industries. The exit from the EU is stated to happen on the 29th March, 2019. Until then, the remaining time gives the UK, Ireland, the EU, and all other concerned parties, time to prepare for a smooth transition. But as the BBC have been reporting over the last couple of months, the negotiating period has been complicated and tumultuous, particularly when it comes to the topic of post-Brexit trade relations with the EU. Naturally, economic analysts and business owners are worried about what this means for one of the country’s most essential industries: energy.
Brexit has already impacted the
gas and oil industry in big ways.
Ireland is already working towards removing all of its oil reserves from the UK, which are kept there under EU agreements. Members of the EU are required to always have at least 90 days of oil reserves in the event of a national emergency. Around 40% or 200,000 tonnes of Ireland’s overseas oil reserves are stored in UK refineries, and the removal of this oil is currently the most significant Brexit-related decision by the Irish government. The Irish News speculates on two possible ways for the removal to happen. Tankers could be deployed to physically redistribute the Irish oil back to Ireland and to other member states of the EU. The other option is to negotiate trade deals in which the Irish oil that’s already in the UK becomes UK property, while British oil stored in EU member states becomes property of the Irish. Either way, it’s another logistical/political problem left in the wake of Brexit.
The fate of UK gas is also undecided as well. During unusual cold snaps in which the UK’s gas consumption skyrockets, the rest of mainland Europe has always helped in keeping the British warm. According to some experts, there’s no guarantee of this happening again once Brexit is finalised. The UK Energy Research Centre’s Michael Shaw explains how the UK’s gas industry is likely to face uphill challenges related to domestic demand and increased import dependence. Right now, around half of the UK’s gas is imported, most of which comes from the EU Internal Energy Market, which the UK will cease to influence at the end of Brexit’s transition period. More than 80% of UK households use this gas for heating, and additionally, the UK’s gas supply is used to create 42% of its electricity. The likely result is that this will ultimately make the UK more reliant on the global gas market. Meanwhile, this also creates regulatory energy risks for all of Europe. The UK is a major thoroughfare for the European energy market, and it remains unclear as to how the continent-wide transport of gas will be regulated post-Brexit.
British Prime Minister
Meanwhile, British Prime Minister Theresa May has been working on preventing the impending energy crisis by making deals with Azerbaijan – a foreign government that’s capable of providing UK’s energy needs, but is also involved in cases of human rights repression and electoral irregularities. This uncertainty is further fuelled by the resignations of Boris Johnson (former Foreign Secretary) and David Davis (former Brexit Secretary), which FXCM reports are due to disagreements with ongoing Brexit negotiations. While many hoping for a soft Brexit believed that Davis and Johnson’s departure would lead to closer ties to the EU, the government is still as divided as ever.
Energy Policies Are Changing
Britain’s energy policy is going to change next and this could be a positive. We reported that technologies like the eeMGee fuel conditioner and EniGMA electronic water descaler give the public the option of taking fuel efficiency into their own hands. With the price of fuel potentially increasing in the near future, the public and companies will be looking for more efficient sources.
Considering all these developments, one thing is certain: the UK is desperately in need of a viable post-Brexit roadmap for its energy supply and industry, especially since the March 29, 2019 Brexit deadline is fast approaching.