Aberdeen is facing significant economic challenges as its once-thriving North Sea oil and gas sector declines rapidly, leading to widespread job losses and business closures across the city. The downturn has left many residents and industry workers concerned about the future of the local economy and uncertain about the impact of government policies.

Once a bustling hub of activity fueled by offshore energy production, Aberdeen’s streets now bear signs of economic contraction, with vacant shops and office demolitions becoming increasingly common. Longtime residents like Angela Bardbrook, owner of a local tearoom, report a sharp drop in customer traffic compared to earlier years when the oil industry was booming. Many in the community attribute the sector’s troubles to policy decisions made under the leadership of Ed Miliband, the former Energy Secretary.

Miliband’s tenure saw a significant tightening of policies affecting the oil and gas industry. Labour increased tax rates on the sector and halted the issuance of new exploration licenses. Miliband argued that expanding domestic fossil fuel production would be counterproductive to the country’s net zero emissions targets. However, critics say these measures have accelerated the decline of the North Sea industry, forcing companies to exit and increasing reliance on imports, particularly liquefied natural gas (LNG) from countries like the United States, which carries higher greenhouse gas emissions and lacks associated tax revenues.

Industry officials warn that many oil rigs and platforms are being decommissioned earlier than anticipated, leaving billions of barrels of recoverable oil untapped. The North Sea Transition Authority (NSTA) projects that oil and gas output, which stood at 1.7 million barrels per day in 2018, will fall by 67 percent to around 580,000 barrels per day by 2031—significantly below earlier forecasts. The number of producers operating in the North Sea has nearly halved since 2015 as major companies such as ExxonMobil, Shell, Eni, and Chevron have either reduced their presence or announced planned exits.

This shift has triggered a sharp rise in unemployment within the sector. Redundancies are mounting, with reports of roughly 1,000 workers losing jobs monthly. The workforce connected to oil and gas, which currently employs about 200,000 people in the UK, could shrink by half by 2030 if the current trajectory continues. For many local workers, including engineers and support staff, these job losses are deeply felt and have led to political shifts, exemplified by the Conservative Party’s recent victory in the Aberdeen South by-election, their first Scottish by-election win in over five decades, on a platform pledging support for the North Sea industry.

Despite the decline, experts emphasize the strategic importance of the North Sea as a national asset. Paul de Leeuw, director of the energy transition unit at Robert Gordon University, cites the North Sea’s continued capacity to produce significant volumes of oil and gas that the UK will require under its net zero commitments. Industry leaders call for a more balanced policy approach to manage a "just transition" that could extend oil and gas production while developing renewable energy infrastructure, preserving jobs and expertise.

Renewables development in the region, however, faces barriers including regulatory and grid connection delays. The Port of Aberdeen’s recent £420 million investment to support energy diversification has yet to generate substantial returns from renewables, with oil and gas still accounting for the majority of its revenue.

The economic fallout is visible across Aberdeen, as house prices have fallen nearly 30 percent over the past decade, contrary to broader Scottish trends. Well-paid energy workers are relocating, and local businesses are shutting down, deepening the city’s economic malaise. Some residents express frustration with government strategies, feeling decisions are disconnected from the realities faced by those dependent on the oil and gas sector.

A government spokesperson maintained that oil and gas production would continue for decades while clean energy industries in the North Sea are scaled up. The government has dismissed calls for new exploration licenses, citing these would not enhance energy security or lower consumer bills, but pledged to support up to 40,000 new jobs in Scotland’s clean energy sector by 2030.

Meanwhile, voices within the local community, such as longtime resident Peter McCutcheon, express a stark divergence of opinion, blaming political figures for the downturn and calling for accountability.

As Aberdeen navigates the complex intersection of economic survival, political change, and energy transition, its future remains uncertain amid competing priorities and policy debates over the pace and nature of moving away from fossil fuels.