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Oil prices hit $100 a barrel soon after the US and Israel launched their attack on Iran, and though prices have wobbled since, ongoing supply issues from the partial closure of the strait of Hormuz mean they could leap higher, to $150 a barrel or more, by some estimates.

The impacts could be severe – not just increases in the price of petrol, and oil for home heating, but also in the cost of gas, with knock-on inflationary pressures on food, consumer goods and industrial components.

Kemi Badenoch, leader of the Conservative party, this week laid out a plan to “get Britain drilling”, which would involve opening new oil and gasfields in the North Sea, to maximise production, alongside measures to cut energy bills. Here we look at this plan and whether it would work.

Would extracting more gas from the North Sea reduce oil and gas prices for the UK?

No. Badenoch, and Reform UK, have at several points suggested that more drilling could reduce prices, but that is not the case. Oil and gas are sold by private companies on international markets, which set the price, so there is no discount or advantage for UK consumers.

The Conservatives have acknowledged this in the past, and appear to be moving away from such claims. Badenoch’s new plan for drilling largely relies on tax reforms for energy bill reductions. According to the Tory leader, the increased tax revenue from oil and gas extraction, plus the removal of VAT on bills, and some smaller adjustments, would deliver £200 cuts to household energy bills.

Will that work?

The logic appears rather convoluted, as the Tories also want to scrap one of the major sources of tax revenue: the windfall tax on North Sea producers, known as the energy profits levy, which was put in place by Rishi Sunak when Russia’s 2022 invasion of Ukraine sent fossil fuel prices soaring.

The windfall tax has raised about £12bn so far. As the charge is levied on the excess profits companies have made by receiving much higher prices for their products, while their cost base remained the same, the levy does not increase prices to consumers. Windfall taxes have the support of the International Energy Agency.

Badenoch says removing the windfall tax would stimulate production, though there is little evidence that it is inhibiting investment. With the levy, the marginal rate of tax on the UK’s North Sea is 78%, which is the same as Norway’s.

Bob Ward, the policy director at the Grantham Research Institute at the London School of Economics, called it “premature” to consider removing the tax, “with energy companies again set to make windfall profits and the possibility that the government may yet again have to spend taxpayers’ money to protect consumers”.

As for other tax revenues, it is true that they have increased as fuel prices have risen. One estimate this week had the government receiving £20m extra a day, though that does not take into account tax breaks that many companies receive.

These sums may seem large, but the government is also facing higher debt servicing costs and the impact of higher prices across the public sector, so the money is not exactly spare.

More importantly, if this cash were redirected back to consumers, it would have little impact on bills. A study published last month by the Smith School at the University of Oxford found that households would gain only about £16 a year if the tax revenues from a maximally exploited North Sea were redistributed, and if the windfall tax was removed. This was based on energy prices in January, but even the increase in prices since would not raise this figure substantially.

Badenoch also wants to remove VAT from energy bills, which critics have pointed out would be regressive, offering far more money to the rich, driving petrol-guzzling SUVs and heating large houses, than it would to the poor.

North Sea oil and gas companies already enjoy large tax breaks, to encourage them to invest, and licensing new fields could lock in government assistance for companies for years to come. The UK Energy Research Council warned that new fields were likely to be small and marginal projects “that depend on high prices for their profitability”, meaning they would “require state support, and increase overall decommissioning costs for the taxpayer”.

Will the government have to cut energy bills for consumers anyway?

The scale of support needed to cushion consumers from price rises would be much greater than any increase in tax revenue from the North Sea, making for difficult choices. When gas prices spiked after the Ukraine invasion, the Conservative government spent more than £70bn subsidising bills – in effect, handing government money to big energy companies.

Shouldn’t we be supporting UK jobs?

Badenoch has claimed that her drilling plan will safeguard and even increase jobs in the North Sea. She quotes estimates that there are 200,000 jobs in the North Sea, though this is likely to be on the high side: there are only about 30,000 to 60,000 people directly employed in the sector, depending on the definition used, and potentially another 100,000 are supported indirectly.

But her claims on jobs are up against something much more powerful than politics: geology. The North Sea is a declining basin. Issuing new licences to will not change that. More than 90% of the UK’s sector has already been drained, with what remains harder to get at, with supplies set to continue their steep decline in the next decade before running out by 2050, even if drilling is maximised.

Analysis of government data by the Energy and Climate Intelligence Unit show that more than 4bn tonnes of oil has been extracted in the UK since 1975. Only about 218m tonnes are recoverable by 2050 from existing fields, and new drilling could yield another 74m tonnes. That 74m tonnes would be equivalent to 1.7% of the total that could be extracted from 1975 to 2050. There is even less gas left – new drilling would add about 1.1% to total production. In other words, all of the new drilling possible would only put off the end of the North Sea by a year or two.

This reality is reflected in the steep job losses under Badenoch’s party while in power. During the Conservatives’ coalition with the Liberal Democrats in 2013, there were estimated to be 36,000 direct jobs and about 200,000 in the supply chain; at least 70,000 jobs were lost in the decade to 2024, despite new licensing rounds.

Badenoch’s claims on jobs may be partly intended to inflame tensions within Labour on the North Sea – some unions, chiefly the GMB, have strongly opposed Labour’s ban on new licences. But even if new licences were granted, there would be no jobs bonanza. Given the basin’s rapid depletion, the only secure future will be for workers to turn their skills to renewable energy sources, such as offshore windfarms, and potentially carbon capture and storage, and green hydrogen production.

James Alexander, chief executive of the UK Sustainable Investment and Finance Association, which represents investors, said: “Clean energy infrastructure won’t just help to insulate us from economic shocks, but has the power to drive growth and create jobs throughout the country. Policymakers should focus on creating the conditions that enable this fast-scaling sector to attract more investment and strengthen the UK’s global competitiveness.”

Isn’t oil and gas from the North Sea lower carbon than imports?

Taking oil and gas from sources closer to home might at first glance seem to be better for the environment than importing it across the world in tankers. In reality, any difference is marginal. The remaining oil and gas in the UK’s sector of the North Sea is increasingly hard to extract, entailing higher emissions.

This is still lower than some other sources, such as liquefied natural gas exported from fracking in the US, which have greater carbon footprints from their extraction, but other sources of gas are cleaner. One comparison in 2022 found that Norway’s gas had a smaller carbon footprint than the UK’s, and most of the UK’s existing gas supply is imported from Norway.

But this also misses the point: the vast bulk of emissions associated with oil and gas are from burning it. Adding to the global supply of fossil fuels means adding to the stock of carbon dioxide in the air that is heating the planet far beyond safe limits. Claims that the UK would be doing the climate a favour by extracting its own fossil fuels are hard to credit, when there is a clean alternative in moving away from hydrocarbons towards renewable power.

What impact would more drilling have on the climate?

Extracting fossil fuels and burning them will add to the stock of carbon dioxide in the atmosphere, wherever those fossil fuels come from. The Climate Change Committee examined the case for more North Sea drilling in 2022, and found that new drilling would expand the global market for oil and gas, with impacts on the climate. (However, preventing new licensing was outside the adviser’s remit.)

About 80% of the UK’s gas is exported, so most of the emissions resulting from new licensing might fall under other countries’ greenhouse gas inventories. But even the process of extracting them is carbon-intensive, and a study in 2023 found that the emissions resulting just from extracting the oil in the Rosebank field would be enough to exceed the UK’s carbon budgets.

The UK expanding fossil fuel production would also send a damaging signal to other countries, which are still absorbing the impact of Donald Trump’s withdrawal from the Paris climate agreement. Later this month, many governments will meet in Colombia for the first global conference on transitioning away from fossil fuels, which is essential if the world is to avoid dangerous levels of global heating.

“What we are hearing already from developing countries is: why shouldn’t we tap into our own fossil fuel resources, if the UK is doing so?” one senior development official in an overseas institution told the Guardian. “That is a legitimate point. You have to provide leadership.”

Daniel Jones, head of research at the campaigning group Uplift, said: “If you can’t manage to transition away from fossil fuels in a country like the UK, where we are nowhere near as dependent on oil and gas as many other countries, where can you do it?”

What can be done?

We are in the midst of the second oil crisis in less than five years, both demonstrating how the world can be held to ransom by the decisions of a single powerful world leader with fossil fuels and military might. It is increasingly obvious that such vulnerability is a permanent feature of a hydrocarbon economy.

Richard Smith, senior policy adviser at the E3G thinktank, said: “What we’re seeing in Hormuz isn’t a freak, one-off event. It’s an inherent and unavoidable part of the global oil and gas system. Even though we were just in an era of low price and oversupply, globally integrated fossil fuel markets leave all oil and gas consumers bracing for an inflation shock.

“Renewables aren’t without risk – there are also solar panels stuck in Hormuz right now. But for every solar panel that makes it through, that’s secure energy every day for a generation. Renewables and energy efficiency are the only realistic way to escape this crisis loop.”

Military analysts are seeing things the same way: security experts have told governments that widely distributed energy sources, such as windfarms and solar panels, offer far greater resilience against attack than fossil fuels.

Electrifying heating, transport and industry will also mean less energy is needed overall. Nigel Topping, chair of the Climate Change Committee, said: “Ramping up North Sea drilling will not shield the UK from volatile fossil fuel markets. The government needs to bring bills down by making clean electricity cheaper and reducing demand for oil and gas – not doubling down on declining resources.

“A huge amount of energy is needlessly wasted in our current system because it’s built around outdated technologies. The smartest investment is in more efficient solutions that will cut both our imports and our greenhouse gas emissions.”

While the short-term cost of living crisis grabs the headlines, no one should forget that the climate crisis will have far more devastating impacts, and is already raising prices for food around the world. Climate breakdown will wipe out global economies, creating the equivalent of a recession every single year, within the next 20 years.

Investing in renewable energy provides an alternative. Solar and wind generation set a new record last month, reducing the need for gas-fired power generation to just over 2% on the grid on 25 March.

But the full benefits of renewables are not yet being felt by households, because of the way that the UK’s privatised electricity market works, with prices being set by the cost of gas rather than that of renewables. The government is looking at ways of decoupling these prices, which could require restructuring the way the market works.

For households, small changes in behaviour can also add up. Many people could save money by reconsidering their electricity supplier and switching tariffs, and the government has made it easier to see what garages are charging for petrol. For those on low incomes, the government’s warm homes plan is expected to bring insulation to millions, and within months plug-in solar panels should start to become available in supermarkets.

Turning down the thermostat by 1C can save 10% on heating bills; people have been advised to work from home or use public transport, walk and cycle more often, instead of driving; and fitting a smart meter can monitor energy use. For those who can afford it, exchanging a petrol or diesel driven car for an electric vehicle, a gas boiler for an efficient heat pump, and fitting roof solar panels, will all help to cut overall energy use and save money over time.