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An analysis of the effect of the 1976 financial crisis on the development of North Sea oil policy in the United Kingdom
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Resumo(s)
Traditional approaches to the study of financial crises typically involve an elucidation of
causation. Meanwhile, this project seeks to take an original approach in analysing how the
circumstances of a relatively minor crisis, namely that in the United Kingdom in 1976, can
have long-term effects on an economy by eliciting changes in the trajectory of policy
formation. Given the importance of the development of North Sea oil to contemporary
international perception of Britain’s ability to meet future balance of payments obligations,
this project focuses on policy decisions pertaining to this domain. Through an extension of the
narrative approach frequently adopted in the study of financial crises, this project finds that
the crisis of 1976 had significant implications for the development of North Sea oil in two
respects. It undermined the practical clout of the recently formed national oil company
(BNOC), making it a vessel with political rights it was unlikely to be able to realise. Further
to this, it set a precedent in terms of considering the sale of public assets as ‘negative
expenditure’ as opposed to revenue when it agreed to the sale of £500 million in British
Petroleum (BP) shares in negotiations with the International Monetary Fund (IMF) to reduce
the Public Sector Borrowing Requirement (PSBR). Nonetheless, this project concludes that it
was political division within and between parties that both stimulated the crisis and resulted in
less than optimal policy decision-making with regards to North Sea oil.
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North Sea oil UK oil industry Financial crisis