I congratulate my neighbour, the hon. Member for Aberdeen North (Mr Doran), on securing this debate at a critical time.
I have been connected with the industry since I first arrived at the North-East Scotland Development Agency in 1971—two months before BP announced the discovery of the Forties field. We have certainly had ups and downs before, but my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) was right to point out that we are much more vulnerable in a mature province than we were in the early stages. That is why it is much more important that we take appropriate and considered action—not panicky action—to get ourselves to a place where the industry has a secure future. One thing that we all have to accept is that the UK has no control over the world oil price. We must deal with it although it is, as all commodity prices are, erratic and unpredictable. It is certainly not a good basis for planning economic policy.
The other thing that we should recognise is that the good thing about our mature province, as the hon. Member for Aberdeen North pointed out, is that we have created a centre of excellence and a critical mass that are incredibly valuable to the UK domestic economy, and which sustain a £10 billion export industry; that industry, however, depends on an active domestic market and levels of activity, which we must secure. It is interesting that Sir Ian Wood, who inevitably has been quoted several times, is taking a characteristically calm and considered view of the situation. He has explicitly said that the Budget is the entirely appropriate place in which to determine the tax cuts and the timing, and he recognises that they need to be balanced and considered.
Having mentioned Sir Ian and the Wood review, I want to commend my right hon. Friend the Secretary of State for Energy and Climate Change, whose initiative it was to invite Sir Ian to conduct his review, on the basis of discussions with the industry and in the wake of its reaction to adverse tax changes in 2011. My right hon. Friend wanted to see how we could better co-ordinate the infrastructure and future development of resources, which the industry admitted were being undermined by its commercial rivalries; unusually, an invitation was issued to partnership with Government, to try to create a framework to secure and unlock a lot more resources than would be done if the industry was just competing within itself. That was a powerful initiative, and although I agree about the importance of establishing the new authority as quickly as possible, we should recognise that it would not exist at all without the initiative of the Secretary of State. I think we all agree that the sooner it can be set up with the right mix of people—who might just be available now—the better it will be able to get on with its important work.
Oil & Gas UK made the point that, with $50 oil, 20% of North sea activity is uneconomic. There are perhaps too many projects in the North sea that have become conditioned to looking at $70 to $90 oil as the essential basis. Frankly, from every discussion that I have had with an oil and gas economist, that is not a wise basis for planning. It has partly been necessitated by the escalating costs that the hon. Member for Aberdeen North addressed. We have a unique opportunity to tackle several problems at once.