Draining the North Sea of all oil and gas would cost households more than a fully renewable-powered UK, according to a new Oxford Smith School analysis.

Conflict in the Middle East has triggered renewed calls for the UK to restart drilling in the North Sea. The argument is that if we produce more of our own oil and gas, household energy bills would fall.

However, analysis from the Smith School of Enterprise and the Environment (Oxford Smith School), an interdisciplinary research centre of the University of Oxford, finds that the effect would be minimal.

Their analysis shows that even if the UK maximised oil and gas extraction from the North Sea and returned revenues collected directly to households, the reduction in energy bills would be a modest £16 to £82 a year.

In comparison, a UK powered fully by renewable energy could save all households up to £441 a year on their energy bills.

“The idea that draining the North Sea would make the UK more energy secure or significantly save on household bills is sheer fantasy,” said Anupama Sen, co-author and head of policy engagement at the Oxford Smith School. 

“We show that regardless of the remaining lifetime of North Sea oil and gas, a ‘drill baby drill’ approach to extraction would actually cost households more money versus continuing on our path to clean energy,” she added.

UK households are highly exposed to swings in global fossil fuel prices, which are set on international markets and are heavily exposed to geopolitical shocks. This was seen in 2022 after Russia invaded Ukraine. 

The authors argue that producing more oil and gas in the North Sea would not create the UK’s “own special supply”, nor could its price be set specifically for UK citizens. That’s because any new production would be sold on international markets at international prices. The UK doesn’t have the ability to extract, refine and use oil all by itself – some international trading will always be necessary.

With much larger savings to be gained from switching household heating from fossil fuels to electricity, the authors call for a different policy direction, one that reduces the role of gas in electricity production.

The analysis suggests that if the price of electricity was set by cheaper renewable energy rather than by gas, households could save £105 to £331 per year through lower wholesale energy costs. That is roughly three times more than the ‘maximise oil and gas’ scenario.

“Achieving this requires upfront investment – especially for heat pumps and insulation – and therefore depends on effective subsidy and financing mechanisms, particularly for low-income households,” said co-author Cassandra Etter-Wenzel.

“Heat pumps are particularly important for reducing bills because they are much more efficient than gas boilers – they produce around three units of heat for every unit of electricity they use, whereas gas boilers produce just under one unit of heat per unit of gas,” said Sen. 

The authors stress that staying the course on clean energy would not only result in recurring annual reductions in household energy bills but would render the UK truly energy-secure for generations to come. In comparison, North Sea oil and gas is a finite resource that would run out around 2040. 

“With the right mix of policies, households in the UK could benefit from lower bills and stable energy prices long into the future,” said Sen.