The Economic Illiteracy of UK Energy Policy is a Sight to Behold

It seems that economic illiteracy is now a job requirement for leadership positions in the country’s energy policymaking. Few spectacles rival the ongoing comedy of errors that is the United Kingdom’s energy strategy under the stewardship of Michael Shanks, the Parliamentary Under-Secretary of State for Energy since July 2024, and his superior, Secretary of State for Energy Security and Net Zero, Ed Miliband. Mr Miliband has been derisively dubbed ‘Mad Ed‘ by those who see through the haze of eco-utopian rhetoric. Mad Ed’s economic and energy illiteracy has already been the subject of several articles in these pages (here and here).

Mr Shanks’s recent claim that there is “no material difference” between importing oil and gas and producing it domestically in the North Sea is not just a misstep; it is economic illiteracy, a statement so divorced from basic economic principles that it would make an Econ 101 student blush. This is not merely a gaffe but a symptom of a deeper malaise: a leadership that prioritises ideological posturing over the prosperity and security of the British people.

Mr Shanks – with a degree in history and politics and a working background in teaching ‘modern studies’ at a high school and ‘community’ and ‘charity’ work – has no obvious qualifications to hold a senior leadership position in energy affairs of the country. But that seems to present no problem for this Government.

Mr Shanks’s boss, Mr Miliband, alas, fares no better, oblivious to the economic devastation his policies invite. Together, the duo embodies a dangerous trend: the elevation of economic illiterates to senior policymaking roles in a sector critical to the UK’s survival.

The Aberdeen & Grampian Chamber of Commerce Morning Bulletin July 4th

Let us begin with Shanks’ stunning assertion, reported by the Aberdeen & Grampian Chamber of Commerce on its Friday morning bulletin. Mr Shanks believes there is no “material difference” between oil and gas imports and UK’s domestic North Sea production.

This claim is not just wrong; it is economically absurd. Any first-year economics student could recite the basic tenets of gross domestic product (GDP) accounting: domestic production adds to GDP, while imports subtract from it. The North Sea oil and gas industry, despite its decline since its 1999 peak, remains a cornerstone of the UK economy, contributing approximately 50% of the nation’s oil and gas needs, supporting 200,000 jobs and generating billions in tax revenue.

In 2022, North Sea producers handed the Treasury nearly £10 billion in windfall taxes alone, a fourfold increase from £2.6 billion the previous year, thanks to elevated global energy prices following Russia’s invasion of Ukraine. To suggest that importing the same resources — often from Norway, a country that sensibly continues to drill and profit from its own North Sea reserves with properties right beside the UK’s — is equivalent to domestic production is to ignore the economic multiplier effects of local industry: jobs, investment, tax revenues and energy security.

To this day, neither ‘Mad Ed’ nor his sidekicks like Shanks have explained just how importing oil and gas from neighbouring Norway is superior to having Britain produce its own oil and gas from properties in the North Sea adjoining that of Norway’s. How can someone sucking on the milkshake straw in the same glass that I have my straw in be told that, “yes, go ahead, young man, suck it all out, but I can’t because I am the good guy”. Is there a stranger story for my ‘I can’t make it up even if I tried’ file?

The North Sea still holds an estimated four billion barrels of oil equivalent, capable of meeting half of the UK’s oil and gas needs through 2050 and contributing £150 billion to the economy. Yet, under Miliband’s ideological crusade and Shanks’ imbecilic complicity, the Labour Government has chosen to throttle this vital sector.

Labour’s ban on new North Sea licences, coupled with punitive taxation — offshore producers face an effective tax rate of 78% — has accelerated the decline of domestic production at a staggering 11% per year, more than double the rate forecast before these policies took hold. The result? Britain is now haemorrhaging jobs, investment and energy security.

Contrast this with Norway, the UK’s neighbour across the North Sea, which Stuart and Miliband seem to view as a model for outsourcing Britain’s energy needs. Norway, a social democratic state, has no qualms about exploiting its natural resources. Its state-owned energy giant, Equinor, recently inked a £20 billion deal with British Gas owner Centrica to supply gas to the UK, a deal that underscores the absurdity of Miliband’s policies.

Norway drills, sells and grows rich, maintaining balanced budgets, pristine public services and a sovereign wealth fund swollen with petrodollars. Meanwhile, Britain, under the stewardship of Shanks and Miliband, shutters its own fields, exports jobs and imports gas at a higher carbon footprint. Piping it hundreds of miles across the North Sea adds emissions, not reduces them. This is not just economic self-harm; it is environmental hypocrisy dressed up as virtue. But hey, the Labour Government can claim in international circles that the UK is a ‘climate leader‘.

Where did these guys learn what they did?

Michael Shanks’s educational background offers a clue to his baffling pronouncements. With a degree in history and politics, his expertise lies, perhaps, in teaching ‘modern studies’ in high schools – as he in fact did. His stint as a high school teacher and ‘community and social work’ does not equip him to navigate the complexities (or for that matter, simplicities) of energy economics. His career trajectory hardly equips him to grapple with the basics of GDP contributions, energy security or affordable electricity.

Instead, he finds himself out of his depth, parroting Miliband’s Net Zero dogma without questioning its economic fallout. His claim that imports and domestic production are materially equivalent betrays a fundamental misunderstanding of trade balances and economic multipliers. Imports drain national wealth; domestic production builds it. This is not rocket science — it’s basic economics.

Ed Miliband, Shanks’ boss, is no less culpable. His Oxford degree in Philosophy, Politics and Economics (PPE), ‘the degree that rules England‘, might suggest a grasp of economic principles, but his tenure as Energy Secretary reveals a man more enamoured with climate ideology than with practical governance. Dubbed ‘Mad Ed’ by critics like Net Zero Watch’s Andrew Montford, Miliband has earned this moniker through a series of economically disastrous decisions: shutting down the UK’s last coal plant, rushing approvals for solar farms over community objections, and capitulating to Greenpeace lawsuits that jeopardise North Sea investments.

His refusal to defend a legal challenge against drilling in the Rosebank field, which holds 500 million barrels of oil, exemplifies his priorities: appeasing eco-activists over safeguarding jobs and economic growth. Miliband’s policies have already cost the UK its place among the top 10 manufacturing nations, a ignominious first in its industrial history.

The economic illiteracy of this duo – Miliband and Shanks – manifests most starkly in their failure to recognise the strategic folly of import dependence when the country is blessed with oil, gas and coal resources. By choking off North Sea production, they leave Britain vulnerable to global energy shocks. When Russia invaded Ukraine, oil prices soared, and the UK’s domestic producers provided a critical buffer, funnelling billions in tax revenue to the Treasury.

Miliband’s claim that renewables will shield Britain from “petrostates and dictators” ignores the reality that ‘clean’ energy technologies — wind turbines, solar panels, batteries — rely on critical minerals controlled by countries like China. Trading a relatively diversified dependence (oil and gas imported mainly from the US, Norway and Qatar) for another one focused on China (which dominates the solar, wind and EV battery supply chains) is not security; it’s an idiocy which seems to have no problems with a ruling communist party-run country as the preferred partner.

The environmental argument for importing over producing domestically is a sham. Reducing the UK’s carbon footprint by pushing its manufacturing base out to China and elsewhere does reduce territorial carbon emissions. It is something that Keir Starmer and Ed Miliband can boast about in fancy circles of diplomats and virtue-signalling magnates gathered around Davos and UN COP meetings. But the carbon footprint of Britain that consumes energy-intensive products from China and other countries nonetheless has little impact on global emissions which are all that matter – assuming you buy into the narrative that the climate future of the globe is controlled by CO₂ levels in the atmosphere.

Transporting gas from Norway or liquefied natural gas (LNG) from further afield like the US or Qatar generates higher emissions than extracting it locally. A Deloitte study estimated that exploiting domestic gas fields, such as the untapped Lincolnshire shale gas reserve, could significantly reduce CO₂ emissions compared to imports. Yet Miliband, with Shanks’s apparent concurrence, dismisses such opportunities, leaving billions in potential GDP and tax revenue underground while pensioners freeze due to soaring energy bills. The GMB Union, a Labour ally, has called this approach “bonkers” and “absolute madness”, warning of catastrophic job losses and environmental harm. Even Labour’s own supporters see the insanity of this policy.

God Save This Nation

The social cost of this economic illiteracy is staggering. UK energy bills, already among the highest in the developed world, are set to rise further, with Ofgem announcing price cap hikes. Miliband’s promise to cut household bills by £300 through his Net Zero policies has vanished, replaced by vague talk of a “positive vision”. Blaming high energy bills on high natural gas prices is bogus on the face of it as has been incontrovertibly shown by experts like Kathryn Porter and David Turver and as natural gas prices have gone back to the low levels prior to the Ukraine war.

Meanwhile, the closure of Grangemouth, Scotland’s last oil refinery, and the decline of Aberdeen’s oil sector signal a broader industrial collapse. Steelworks and car factories are buckling under high energy costs, and pensioners face cuts to winter fuel payments while the Government pledges £22 billion for unproven carbon capture technologies.

The irony is that renewables, which Miliband champions, are not yet ready to replace fossil fuels – nor are they likely to be in any credible scenario. On days of low wind or sun, gas-powered stations provide up to 75.4% of the UK’s electricity. Even by 2030, the UK will need 42 billion cubic meters of gas annually. Miliband’s rush to decarbonise by 2030 ignores this reality, risking blackouts and further bill hikes

What, then, is to be done? First, Shanks and Miliband must be held accountable for their economic ignorance. Shanks’ lack of expertise disqualifies him from advising on energy policy; he should step aside or be reassigned to a role befitting his actual talents.

Miliband, for his part, must abandon his ideological crusade and adopt a modicum of economic sense. The Government should reverse the ban on new licences, reduce punitive taxes on North Sea producers, and prioritise domestic energy over imports. Fracking, too, should be revisited — Lincolnshire’s shale gas could fuel the UK for seven years, adding £112 billion to GDP and saving lives by lowering energy costs.

The UK stands at a crossroads. It can follow Norway’s path of pragmatic prosperity or continue down the current economically imbecilic road to economic ruin. The choice is clear, but it requires leaders who understand basic economics — not climate zealots or PPE dilettantes. The British people deserve better than to be governed by those who don’t know the difference between producing domestically and importing. It is time to end this embarrassing charade and restore sanity to UK energy policy.

Ed Miliband and Michael Shanks have not provided leadership in energy policy; it is ideological miasma. It’s like Rousseau expecting Voltaire to walk on all fours to re-discover the noble savage within.

This article was first published in the Daily Sceptic ( https://dailysceptic.org/2025/07/10/the-economic-illiteracy-of-uk-energy-policy-is-a-sight-to-behold/ )