“Drill baby drill” approach to North Sea would cost households more than a fully renewable UK, finds Oxford analysis
A UK powered fully by renewable energy could save all households up to £441 a year on their energy bills, according to a new Oxford Smith School analysis. In comparison, maximising oil & gas extraction from the North Sea would save households a modest £16 - £82 per year - and only if the tax revenues collected were distributed to households to offset their energy bills, the authors say.
“The idea that draining the North Sea would make the UK more energy secure or significantly save on household bills is sheer fantasy,” says Dr Anupama Sen, co-author and Head of Policy Engagement at the Smith School of Enterprise and the Environment. “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.”
The estimated savings to households from maximised North Sea extraction assume that the Government would use the extra tax revenues solely to help lower household bills. “If the Government did not choose to do this, there be no discernible benefit to UK households at all, because oil and gas prices are set on and influenced by international markets – and we can see from recent events just how volatile they are,” says Dr Sen.
The extent of electrification within a household would determine the level of savings gained from renewables, the authors say.
“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,” explains co-author Cassandra Etter-Wenzel.
"Heatpumps are particularly important for reducing bills because they are much more efficient than gas boilers - they produce around 3 units of heat for every unit of electricity they use, whereas gas boilers produce just under 1 unit of heat per unit of gas," adds Dr Sen.
The analysis was conducted using oil and gas prices as of January 2026 – prior to the spike caused by the Iran war – as these are representative of realistic medium-to-long-term prices. “Our analysis represents a conservative scenario, in which renewable energy competes against cheap fossil fuels. Even in this ‘worst case’ scenario, renewables are shown to be significantly more cost competitive,” says co-author Nadia Schroeder.
The authors stress that the savings gained from the clean energy transition are recurring annual reductions in bills which would continue indefinitely, whereas 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,” says Dr Sen.