Leaders: The only possible quick fix is recovery by the barrel

North Sea oil industry is struggling to weather the storm. Picture: PA
North Sea oil industry is struggling to weather the storm. Picture: PA
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Harsh truths beckon in the oil industry’s ongoing cycle of decline

Another day, another announcement of significant job losses in the oil and gas sector. Aberdeen is hit hard again as Shell sheds 475 jobs, with most posts lost in the company’s city offices along with posts at St Fergus in Aberdeenshire and Mossmorran in Fife.

The latest losses mean that, by the time the cuts are implemented by the end of this year, Shell will have off-loaded 12,000 staff and contractor roles in the space of two years.

The oil industry’s difficulties are no secret, but the figures remain startling. Shell’s first-quarter profits plunged by 58 per cent at the beginning of this month, and in those circumstances, the consequence is a familiar one.

This is a demoralising cycle of decline, and the damage done to the industry does not appear to be over yet. There have been doubts raised over whether there will be a viable oil industry in the UK in ten years’ time, although we should not lose sight of the fact that while the downturn has had dreadful consequences, Shell’s profits might have been down dramatically but at £1.1 billion for the quarter, the oil industry is a long way from death’s door.

Not for the first time, there have been calls for more government support for the industry. Our politicians respond by saying that they are doing all they can, and we have already seen the UK Government introduce £2.3bn worth of tax measures. The UK and Scottish Governments have also agreed a £250 million City Deal for Aberdeen and Aberdeenshire, to support the area affected directly, while measures have been put in place to support those who have lost their jobs, helping with re-training and education as a redundant workforce makes the transition to other types of employment.

As more cuts come, so do calls for more central government support for the industry. But there is harsh truth to face here, and it is that neither government, north or south of the Border, is able to reverse what is happening in the industry. The barrel price downturn is at the heart of all that is happening, and no amount of shoring up this part of the economy is going to alter the dynamic that is at play here. Market forces are dictating that the previous size of workforce that oil companies operated with is no longer necessary or sustainable, and those forces cannot be denied, at least not for long.

David Mundell, the Secretary of State for Scotland, has said he will promote the Scottish oil industry during a visit to Texas next week, and his efforts will be both welcome and timely, but he cannot work miracles. There is no “fix” to be applied to what is happening in the oil industry.

The one truly effective “bail-out” for the industry would be a recovery of the price of a barrel of oil. With no sign of that on the horizon, we have to brace ourselves for further pain with more job losses, and our governments must press on with attempts to mitigate the damage – in particular, the plight of the thousands who are now out of work and may find that even a full recovery does not reverse the recent contraction of their
industry.

More that unites than divides

The annual gathering of the General Assembly of the Church of Scotland was witness to a historic event

yesterday that would have been unthinkable not so long ago.

For the first time since the Scottish Reformation in 1560, the head of the Church of England took part in debate at the Assembly. The act itself seems ridiculously simple but, as history demonstrates, the matter is not so

straightforward.

In an increasingly secular society, it is too easy – and fashionable – to dismiss the relevance of the churches. But there have been times when the churches have contributed to their own bad publicity, and refusing to have dialogue has not helped their public images.

Now, in more tolerant times, the Archibishop of Canterbury is allowed to address those gathered at the Mound in Edinburgh, and discuss the Columba Declaration aimed at closer working between the two churches north and south of the Border. The Declaration is long overdue, and its existence is evidence that the churches have recognised that their missions are not mutually exclusive.

Rev Geoff Berry put the situation into sharp perspective when he told the Assembly yesterday that army chaplains are already working with other denominations in their daily duties. Describing soldiers at Camp Bastion who were struck by grief as they stood over the body of a lost colleague, he said: “All they cared about was the comfort of our presence.”

As the churches have finally found, there is more that unites them than divides them. In the often acrimonious debate over organised religion versus secularism, believers and

non-believers may also wish to consider that possibility.