2007 - 2021

The Fuel Crisis and the Three-Day Week

The UK is in the midst of an energy crisis, with surging gas prices causing multiple suppliers to collapse and petrol forecourts running empty amid panic buying. It is a crisis that invites a comparison to an earlier shock.

In October 1973, as war erupted between Egypt, Syria and Israel, Arab oil producers declared an embargo against Israel’s western allies. The consequences of this embargo were sudden and severe. The price of oil more than quadrupled.

In the UK this oil squeeze quickly escalated. In a dispute over pay, the National Union of Mineworkers implemented an overtime ban in November before miners voted for a full strike in January. It was the overtime ban, which had a significant impact on production, that pushed the Heath government to declare a state of emergency. The now infamous three-day week was adopted in a desperate attempt to preserve energy supplies.


At the time oil and coal accounted for the vast majority of the UK’s energy supply, with gas and nuclear power making smaller contributions. But the balance had shifted significantly from the beginning of the previous decade, when coal accounted for 75% of the energy mix, to oil being the biggest source of power. North Sea exploration had begun in the 1960s but had not yet produced commercial supplies. In little over a decade the UK went from meeting the vast majority of its energy needs from a fuel buried under our feet, to being dependent on imports from a regional bloc willing to turn off the taps as a political weapon.

Unsurprisingly, an immediate impact of the oil crisis was for western nations to hasten their efforts to identify alternative supplies. Such a set of circumstances had been predicted. The Trade and Industry Secretary Peter Walker told the House of Commons that “faced with the likely prospect of an oil crisis in the Middle East” the government had a year previously begun “to pursue the only sensible energy policy available to the country, which was swiftly to increase the supply of energy from every available indigenous source.” North Sea oil was to be developed as quickly as possible and nuclear power expected to play a major role.

But such a transition would take time. A more despondent response was to see energy as a cost that should be reduced permanently. The European Community agreed a plan to slow the growth of energy consumption, with a particular focus on oil, while an internal Downing Street report declared that the oil crisis had ended the era of “cheap energy for ever” and recommended taxes or bans on some household appliances.

As it happened the extraordinary rise in oil prices was a massive boost to the commercial viability of European oil production. The North Sea is a technologically challenging place to extract oil. Consequently the costs per unit faced by North Sea producers were significantly higher than for the existing exporters in the Middle East. But the oil crisis dramatically altered these calculations, and the UK government was by 1974 warning that multinational oil firms would reap such “enormous and uncovenanted profits” from their North Sea licences that the wealth flowing out of the UK would be “intolerable”.

The simultaneous pressures on supply of coal and oil quickly led to the end of the Conservative government. In the midst of the three-day week and the miners’ strike, Edward Heath called an early election which saw Labour come to power as a minority government. The attempt to gain a political mandate to face down the NUM failed. Harold Wilson, the newly elected Prime Minister, swiftly agreed a pay deal with the miners and the three-day week ended.

For Heath’s replacement as Conservative leader, there was an important lesson to be learned from this crisis. While reliance on foreign imports had harsh economic consequences it was the reliance on a heavily unionised workforce that had ultimately brought down the government of which Margaret Thatcher was a minister. A decade later she was determined to exact her revenge.

Today China faces its own energy crisis. Several regions have faced widespread power cuts due, in part, to a lack of coal. This comes as China, keen to signal its green credentials, has pledged to stop investment in coal outside of its borders.

China’s current struggles are one factor driving up global demand for, and so the cost of, gas. This is a fresh reminder of the lesson learned in the 1970s – that reliance on imported fuel leaves a country vulnerable to external shocks. And as in the 70s, the UK government has signalled that it sees an expansion of nuclear power, and a continuation of North Sea exploration, as key solutions.

In the debate over the Cambo oilfield, supporters of the industry cite the importance of continued domestic production while the country transitions away from fossil fuels. Inevitably, the same arguments will be made by those who wish to prolong China’s coal mining, and in every other country with domestic fossil fuel supplies. If oil is not drilled in Scottish waters, the argument goes, we will be forced to import from elsewhere.

In the 1970s, the expectations within Downing Street that the government would need to ban electric toothbrushes and hedge clippers never came to pass. The era of cheap energy was not over – new sources were found, and supply and demand grew in tandem. The initial instinct to stem our dependence on fossil fuels was forgotten.

Sources:

Hansard – Fuel and Electricity Control Bill debate, 26 November 1973

National Archives – North Sea Oil Policy, 1 July 1974

Oil crisis and a veto on the Queen, The Guardian 1 Jan 2004

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  1. George Gunn says:

    Good piece, Dan. It seems the Tories have learned nothing. The Scottish Government really have to be braver when it comes to energy. Scotland is awash with renewable energy. Where I live in Caithness there are several nuclear reactors being decommissioned and the cost is astronomical and the environmental damage an “official secret”. The county is covered in windfarms which profit the landowner and the power company. Off our East coast is one of the biggest wind farms in the world. Tidal energy, which as long as the Moon is in the sky, from the Pentland Firth is perennial and yet chronically and deliberately under invested. The electricity flows South and sold back to us at an expensive rate. Energy is a reserved matter for a reason. This has to change. I lived through what you have written so eloquently about and I remember it well. Ten years later Margaret Thatcher destroyed mining and with it working class organisation. I worked in the North Sea in the late 70’s and early 80’s and saw at first hand the waste and the filching of our nations wealth by a handful of US oil companies and the price paid by the working class in such tragedies as the Piper Alpha and other not so well known fatal accidents. All of this is why we need an independent Scotland where we can nurture our people and protect our environment.

  2. Wul says:

    To abandon the drive to reduce energy consumption when “cheap” energy was restored was madness. Using less of any commodity is a sure way to increase resilience and sustainability. Why has no government ever embarked on a serious programme of high-quality, well insulated home building for the masses? I’m talking about the comparable amounts of money to that spent on nuclear power. Billions. Trillions?

    We are happy to chuck £25 billion every year into the wallets of private landlords in the form of housing benefit. How many “passive house” flats with district heating could that build?

    We now live in a country where people who are campaigning for something as mundane and sensible as home insulation have to risk arrest, criminal records and imprisonment in order to try to influence energy policy. Such is our democratic deficit that lying on a motorway is the only way to attract government’s attention.

    Every home in my street has it’s own obsolete, inefficient little gas boiler, merrily burning fossil fuels in order to heat the Scottish sky. Madness.

    1. Alasdair Macdonald says:

      “We are happy to chuck £25 billion every year into the wallets of private landlords in the form of housing benefit”. This was one of the main reasons for ‘the right to buy legislation’ by the Thatcher Government – so that rentiers could scoop up public money. Such money could, indeed, be used for a continuous programme of improving existing housing to reduce their demand for energy. Many Labour MPs, Lords and former MPs have substantial property portfolios. Labour is also beginning to make noises about more nuclear energy.

      When I was taking my Highers in 1965, our school science departments organised a series of lectures on various topics. One of these was on tidal energy and included a proposal to use the recently developed ‘Salter’s Ducks’ to produce electricity and, use it, on site to electrolyse water to produce hydrogen to be piped ashore. The lecture proposed a chain of tidal generators between Barra Head and the north of Ireland. At that time, it was clear that shipbuilding in the West of Scotland was struggling, largely because of lack of investment and modernisation rather than, as was ‘spun’ at the time, due to obstinate trade unions and a workforce unwilling to change. As the lecturer pointed out, that workforce could build ships and build them well, so their skills should be deployed in building floating electrolysis plants. Because of the salty environment these would suffer from corrosion and would need regular replacing, but the gains in cheap and unending energy far outweighed to replacement cost, and a skilled workforce would have secure employment into the future. That was 1965, as I said. The technology was available 60 years ago for renewables and the use of hydrogen as a non-polluting energy source was shown to be feasible.

      However, with North Sea gas coming on stream shortly after, there was a ‘dash for gas’ to replace the existing coal fired stations and to phase out town or coal gas for heating and cooking in homes.

  3. Wul says:

    Daily Mail front page, 11th May 2017:

    “LABOUR’S MANIFESTO TO DRAG US BACK TO THE 1970s”

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