The Oil Rush | Mervyn Jones & Fay Godwin


Published in: 1976

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In 1950, oil accounted for only 10% of Britain’s energy consumption. By 1970, the share had increased to 44%, with coal at 47% and the rest related to natural gas, hydropower and nuclear power. The Oil Rush is a reportage book with views from oil rigs and cities in Scotland during the oil boom in the North Sea in the 1970s. At that time, in addition to recessions, Britain consumed about 115 million tons of oil per year, of which 95 million tons came from the Middle East (including Libya). There were many indications that production in the North Sea in 1980 would match British oil consumption, equivalent to 150 million tons in the following decade.

IMPERIALIST-LIKE HISTORY IN OIL. First to reap the “black gold” were Persia and Mesopotamia, as Iran and Iraq were called, and Burma. The Anglo-Persian Oil Company, which became British Petroleum, was the main contractor. Royal Dutch Shell, with capital and directors from both the UK and the Netherlands, opened operations in Indonesia (part of the Dutch Empire) and spotted an oil bonanza in Venezuela.

THE US IS EMERGING. As the United States began its transition from an agricultural society to an industrial economy, oil became urgently needed. John D. Rockefeller early became the monarch of the oil fields. Within a decade, the company, Standard Oil, controlled all aspects of the oil industry. After World War II, American dependence on imported oil increased. Many American companies – for example Exxon, the modern name for Standard Oil – then chose to open new fields in the Middle East.

UK GETS A SLICE OF THE NORTH SEA. Following was the background of the industry when oil first flowed in the UK in 1975. Burma had by this time disappeared from the oil map, but in 1973 Iran had a production of 293 million tons, Venezuela 179 million tons and Indonesia 64 million tons. The expectation was that 115 million tons would be produced from the North Sea in 1980 – corresponding to the needs of the whole of Great Britain at the time. There was much to suggest that even a surplus would be produced, which would enrich Britain’s economic position. The giant Ekofisk oil field was expected to produce 30 million tons in 1980. The oil is on the Norwegian side but goes through a pipeline to the UK.

FINDINGS BREEDS NATIONALISM. The oil was geographically found in Scottish waters, and the idea that it was the Scots’ oil was enticing. If these oil revenues went to an independent Scotland, it could more or less cover the budget of a nation of five million people. By this time, many Scottish citizens had also read about Kuwait’s economy and that the country had no income tax. It was also discussed that Scotland would sell oil to England – and thus get a large payment surplus. It was hardly surprising that the Scottish National Party increased significantly in the 1974 election.

EXTRACTION IN WATER WAS NEW. The North Sea is shallow according to sea standards but was still deeper than any other water where oil workers previously worked. A rig is used for exploration – test drilling to find out if there is oil at a given location. It was moved on after a month or two. A platform, on the other hand, is designed to stay in the same place for several years.

MORE EXPENSIVE THAN LAND EXTRACTION. A CEO of an American company gave the author a geographical comparison between costs in the Middle East and costs in the North Sea. On land, production costs are between ten and twenty cents per barrel; in the North Sea, they are from two to four dollars without counting on extra costs such as underwater pipelines. Until 1973, the world price of oil was $4 per barrel, giving us an insight into profit levels.

ABERDEEN WAS “BRITAIN’S OIL CAPITAL. Aberdeen became Britain’s “oil capital” and could well be a fine one. The public buildings look like ministries; the university looks like a university (not a factory like most British universities); the castle looks like a royal residence, but was actually built by the Salvation Army. The author noted that the population went on with life as usual. With 185,000 inhabitants, Aberdeen was large enough to accommodate a new development, but the population preferred not to become dependent on the deposits.

PETERHEAD – BOOM TOWN. Oil fever could be observed in the smaller Peterhead of 14,000 inhabitants. In the 1960s, the city had admittedly had a certain economic upswing. Three new factories came to town: a gearbox manufacturer (which was taken over by GM), a workshop and a textile mill. The fishing industry was present because some larger trawlers began using Peterhead, a non-union port. But the pessimism was in the air. Until the oil companies began to establish branches, just like drilling companies, delivery boats and pipe construction companies. This created a strong local demand for workers, something that has almost never happened before in Peterhead’s history.

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