The UK Oil Refining Industry

By Paul Homewood

Amidst all of the recent debate about electric cars, we have heard little about the impact on the UK’s oil refineries.

In 2013, the House of Commons Energy and Climate Change Committee published a report, “UK Oil Refining”, which laid out some of the facts about the industry, its importance to the national economy and the challenges it faced.

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One of the seven, Milford Haven, has since shut, leaving these six:

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Sales of petrol and diesel account for about a half of refinery output, so the banning of petrol and diesel cars will have a substantial impact on the industry.

According to Michael Fallon, then Minister of State for Energy:

The estimate of 26,000 jobs is only the tip of the iceberg. The UKPIA (UK Petroleum Industry Association) reckons that, taking into account downstream activities, the real figure is over 150,000.

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Many of these jobs are highly skilled, as are those in related industries such as chemicals.

If UK oil refineries lose much of their sales of diesel and petrol, the problem does not stop there.

Oil refineries typically convert crude oil into a variety of end products, as this UKPIA diagram and note show:

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Put simply, the crude oil is broken down into more useful components. Take away petrol and diesel, and the other products still produced (and still in demand) become hopelessly expensive to make, because the whole process is now so ridiculously inefficient.

Given that other countries are unlikely to hamstring their industries in this fashion, it is not difficult to see that the UK oil refinery industry will quickly shut up shop completely. Imports will quickly be sucked in to supply the aviation fuel, heating and marine fuels, diesel for HGVs, petrochemicals and other speciality products, which will all still be needed.

The UKPIA have produced this graphic, listing many of the things in our day to day lives which depend on crude oil:

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There is also likely to be a knock on effect on the UK chemical industry. Some of the refineries are integrated with chemical plants, for instance Stanlow and Fawley.

It is difficult to see how these chemical plants could remain viable if the refineries were shut down.

The government likes to prattle on about the new green jobs it is hoping to create. Yet here we have an industry which makes an important financial contribution to the economy, supports thousands of jobs, many with highly specialist skills and technological expertise, and provides the building blocks of countless products which we rely on in our everyday lives.

At a stroke of Michael Gove’s pen, all of this could now be put at risk.

And we won’t have to wait until 2040 for it to happen. With demand shifting in the meantime, it is unlikely we will see much new investment in the industry in the foreseeable future. The inevitable result will be a slow and lingering death.