Why more green energy will protect us against volatile spikes in oil and gas prices

Fossil fuels aren't the solution to the caprices of global politics ...

The human cost – innocent lives lost, families devastated, homes destroyed, vital infrastructure decimated – is clearly the most appalling feature of the war in the Middle East, instigated by a man who talks about bombing “just for fun”. It is also important to recognise the decades of struggle of the Iranian people against a regime committing human rights violations.

However, reading the news, that all seems to be viewed as secondary to the impact on oil and gas prices. Why that is the case is something I think we might all pause to reflect on … but that isn’t what this article is about.

The focus on fossil fuel prices has also spawned lots of discussion about renewables and net zero – some of it lacking a basis in facts.

Starting from what I think everyone would agree with – this is the second time in just four years that military action taken by one country against another has caused huge increases in the world market prices of fossil fuels.

The UK was (and is) not involved in the conflicts, had no ability to stop them and wasn’t involved in the decisions leading up to them (so couldn’t predict or prepare in advance). But, like almost every other country, it is directly affected by these conflicts because of our heavy reliance on these fuels, which we buy on the world market.

I think everyone would also agree that sudden, steep and unpredictable increases in energy prices are a bad thing for almost everyone. So far as I can tell, the only beneficiaries are oil companies. Not long after Russia’s invasion of Ukraine in 2022, it was being reported that they had received a $200 billion “windfall” from increased prices and they are expected to make billions more this time around.

The energy bill support provided in the UK in 2022-23 cost UK taxpayers £41.6 billion (keep this figure in mind for later) and the government has already announced £53 million of support in response to the latest price increases.

What the UK government has predicted – in its own national security assessment, which was published in January earlier this year – is that the collapse of ecosystems caused by climate change is likely to lead to greater conflict and military escalation.

While the current crisis will no doubt pass in time, it’s highly likely that there will be more. And if when the next one comes, the UK is still as reliant on buying fossil fuels on the world market as it is today, the results will be the same.

Some suggest that the UK can achieve greater energy security by drilling for more oil and gas in the North Sea, but this ignores some basic facts.

Unlike countries such as Norway, the UK did not maintain national control over its oil and gas industry, preferring to privatise it in the 1980s. The companies exploiting North Sea reserves require licences to do so from the UK government but are otherwise broadly outside its control.

Those companies operate in and sell in global oil and gas markets, with around 80% of North Sea oil being exported. The UK lacks the refining capacity that is suitable to deal with the oil found in the North Sea, so even if it wanted to, there would be little point in the UK forcing oil companies to retain it in the UK.

Reserves are also heavily depleted, with the easiest-to-access (and therefore cheapest) already exhausted. In 2023 it was estimated that new oil and gas fields in the North Sea under consideration would produce only enough gas to satisfy the UK’s needs for a few weeks a year, even if none of the gas was exported. New oilfields would supply at most about five years of demand, again assuming none was exported.

And even if the UK increased production, it would be insufficient to affect the global markets and therefore wouldn’t significantly reduce UK domestic energy prices. As researchers at the University of Oxford said earlier this month when looking at the potential impact of further oil and gas from the North Sea:

“We find that the exploitation of all remaining North Sea Oil and Gas resources yields substantially smaller annual savings to households than switching to renewable energy – around 5–7 times lower.

“The analysis finds estimated annual savings of approximately £16–£82 per household from North Sea fiscal revenues versus around £105–£441 per household under renewables-led energy and electrification.”

This brings me to the alternative approach – rapid growth in energy sources that are not controlled by any country. Some say that driving to net zero is too expensive and others even call it “stupid”, but that isn’t the case.

On the point of costs, the Climate Change Committee’s recent analysis concluded that “for every pound spent on Net Zero, the benefits outweigh this by 2.2 to 4.1 times” and that “an electrified energy system is both a more efficient and a more secure system”.

The committee also pointed out that the total additional cost of another fossil fuel spike like the one following Russia’s invasion in 2022 (the £46.1 billion mentioned earlier) was likely to be as much as the total cost for every year of getting to Net Zero by 2050. And now it’s happening again!

One element of this analysis is taking account of the inefficiency of fossil fuels, as over half of the primary energy they produce is wasted (think of the steam coming from power station cooling towers or the heat from a petrol/diesel car engine). The committee estimated those losses at £60 billion per year, equivalent to £2,000 per UK household.

Meanwhile, the costs of renewable energy generation (particularly solar) are tumbling as the technology improves. A recent article describes how every doubling of cumulative production over the past 50 years has cut the price of solar modules by nearly 24% and the price is still falling. The cost of solar panels in 1958 was $1,000 per watt and the cheapest cost today is seven cents per watt.

It is often pointed out that solar doesn’t generate when it’s dark and turbines don’t work when the wind doesn’t blow – the issue of intermittency – but battery storage costs are also falling fast – by as much as 97% since 1991.

The US installed a record amount of battery storage in 2025, four times what was installed just three years ago, and the US Solar Energy Industries Association said:

“Whether it’s paired with solar or standing on its own, energy storage lowers consumer costs, makes the grid more reliable and keeps the power on in homes during outages.”

We also already generate more power from wind than we can use, due to constraints of the UK grid. When it’s very windy, we pay wind farms to switch off and gas-fired power stations to fire up. In 2023 it was estimated that this wasted power added £40 to household energy costs.

For the most up-to-date figures, check out Wasted Wind. The total for 2025 was a truly shocking £1,467,023,332. Now that is stupid. Grid improvements, better storage, and zonal pricing would all help to avoid this massive waste.

It would be naive of me to suggest that the UK can switch entirely to renewable energy overnight (as it is to think we can have significantly more North Sea oil and gas just by turning on the tap), but the closer and quicker we can move towards that will put us in a better position the next time fossil fuel prices spike.

Looking at the experience of Spain and Italy provides a good illustration. Spain’s rapid rollout of renewable energy generation means its domestic prices are only set by the higher-priced gas 15% of the time, whereas in Italy that figure is 89%.

As a result, Spain’s electricity prices for the second quarter of this year are expected to be around €66 per megawatt hour versus €150 in Italy.

More North Sea oil and gas isn’t the short-term answer, nor one for the long-term. What will bring down bills, give greater energy security and avoid adding more CO2 emissions that the planet can’t afford is rapidly pursuing the cleaner, cheaper technology that is improving daily.