What’s the real reason Jim Ratcliffe is backing Starmer?

On the face of it, there could hardly be a better example of a turkey voting for Christmas than the news that Jim Ratcliffe has come out and backed the Labour party. Yes, a Brexiteer who owns one of Britain’s six oil refineries really is throwing his weight behind Keir Starmer, a man who wanted to frustrate Brexit through a second referendum and whose party is committed to speeding up net zero by refusing to issue new licenses for oil and gas extraction in the North Sea and by decarbonising all power by 2030. Clearly, Ratcliffe is not stupid, so is he suffering from Stockholm Syndrome, or is there some expedience in his political declaration?

I suspect the latter. It is poignant that Ratcliffe didn’t come out as a Labour supporter three years ago, when the Tories were ahead in the polls, nor even a few months ago when it was conceivable that they still had a chance to pull off victory, or at least restrict Labour to being the largest party in a hung parliament. He has announced his conversion two weeks before polling day when the polls are so miserable for the Tories that there cannot be anyone left on Earth who thinks they have the remotest chance of continuing in government. If you can’t beat Labour, in other words, why not join them? At least that way Ratcliffe might get to moderate their green policies.

In any case, Ratcliffe might not necessarily emerge from Labour’s green policy as a loser. I referred to Grangemouth above as an oil refinery, but it won’t be for much longer. It is already in the process of being converted into a straightforward oil and gas terminal, where fuels can be imported and stored. In particular, Grangemouth is building a facility to receive liquified natural gas (LNG) from the US. Labour’s policy of refusing new licences for oil and gas extraction in the North Sea is only going to boost this business because it is going to make Britain more reliant on imported LNG.

Moreover, while Labour had previously said that it wanted to build its decarbonised national grid almost entirely on renewables and nuclear it is now saying that it wants to keep a strategic reserve of gas power stations – whose emissions it wants to mitigate through carbon capture and storage. Ratcliffe has no doubt worked out that there will be plenty of public dosh on offer to develop carbon capture and storage plants (as there is under the present government) and that he is more likely to bag some of that if he can be seen to be on Labour’s side. He is also planning a hydrogen electrolysis plant – for which Labour will no doubt be doling out more money as part of its ‘green prosperity’ plan.

At the same time, Ratcliffe’s attempt to build a UK fracking industry has been doomed ever since Boris Johnson placed a moratorium on it – later briefly lifted by Liz Truss, only to be reimposed by Rishi Sunak. So there is nothing for Ratcliffe to support there.

Labour’s Green Prosperity might not offer much in the way of prosperity for consumers who face higher taxes and energy bills, but you can be sure that shrewd business people like Ratcliffe will find some way to benefit. Expect a few more unlikely political conversions from business figures over the next fortnight as they bow to the inevitable and figure out that they would be better off being seen to be on the side of the incoming Starmer government.