THE demise of Britain’s self-sufficiency in oil loomed larger yesterday as it emerged that the country plunged into the red on trade in crude in 2005 for the first full year since the late Seventies.
After becoming a net importer of crude for most of the second half of last year, Britain recorded its first annual deficit on trade in oil since Margaret Thatcher came to power in 1979.
Over 2005, Britain exported 50.2 million tonnes of North Sea oil worth £10.9 billion. But this trade was eclipsed by imports of 55 billion tonnes, worth £11.4 billion, to meet the needs of an energy-hungry nation, the official figures revealed.
Although the country’s oil trade was back in the black during December, with an oil surplus of £333 million for the month, the figures will inflame concerns over Britain’s growing dependency on imported energy, especially from politically volatile sources in Russia and the Middle East.
Amid industry criticism of Gordon Brown’s decision in December to tap North Sea oil groups for additional revenue, the Treasury pinned much of the blame for the annual oil deficit on temporary production shutdowns, partly due to fires on two rigs.
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But the news came amid a backdrop of rising anxiety over energy supplies and surging costs for imported gas.
Finance ministers from the Group of Seven leading economies will use a meeting in Russia this weekend, under Moscow’s G8 presidency, to press the Kremlin to fulfil its pledge to bolster security of energy supplies to Western nations.
Britain’s slide into the red on oil trade helped to send its overall annual deficit on trade in goods for last year to a record of £65.4 billion, up from £62 billion in 2004. The combined deficit on goods and services was also a record £47.6 billion, up from £39 billion.
Based on the Treasury’s expected value of GDP for last year, the goods deficit is set to amount to 5.4 per cent of national income, the highest since it hit 6.3 per cent in 1974.
December’s goods trade gap was also worse than the City expected, at a hefty £6.1 billion, up from £6 billion in November, as the nation’s export performance disappointed hopes for a revival.
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The underlying deficit for December, after stripping out oil and erratic trade in goods such as precious stones, widened £800 million to a record £6.3 billion for the month. The growing power of China and India as global exporters was underlined by the data.
Britain’s imports from China were 24 per cent higher last year compared with 2004, although UK exports to China also rose by 18.6 per cent.
Imports from India rose by more than a fifth last year but British exports to the sub-continent did even better, climbing 25 per cent over the course of 2005.
INS AND OUTS OF BRITISH OIL