There may be oil near Gatwick, but don’t buy your stetsons yet

Dallas has come to the Sussex weald. Oil workers will soon be crawling all over the Horse Hill field close to Gatwick airport after UK Oil and Gas investments announced that there were up to 100bn barrels of crude waiting to be exploited. Or perhaps not. This is oil that should, and probably will, be left in the ground.

Here’s why. Horse Hill could be a significant find, which UKOG says could meet between 10% and 30% of UK demand by 2030. But there is still a great deal of uncertainty about how much oil is there. It could be anywhere between 50bn barrels and 100bn barrels, which is quite a big range.

Moreover, it is unclear at what level of oil prices extraction would be commercially viable. What is certain is that there will be plenty of residents of West Sussex who will argue that it is not environmentally viable. UKOG is saying that it could get the oil out of the ground using conventional drilling techniques, which would avoid the controversy about fracking that resulted in the protests at nearby Balcombe. But UKOG would be naive if it thought it was going to drill in a leafy part of England where employment is high without a political backlash.

Protesters will argue that the need to prevent climate change requires up to 80% of fossil fuels to be left in the ground, starting with Horse Hill. Those investors who piled into UKOG shares yesterday may be right: Gatwick could soon be famous for both its airport and its oil. Just don’t bank on it.

Co-op looks up

It’s as well to remember the old adage about one swallow not making a summer when looking at the latest results from the Co-op Group. In an extremely testing environment for retailers, it was encouraging that the Co-op turned in a trading profit of £124m in 2014, compared to a £255m loss in 2013. Like-for-like sales in its food stores were up 0.4%, which sounds nugatory but was not a bad performance given the cut-throat competition in the sector.

To push on from here, the Co-op will need to differentiate itself from rivals, and the idea is to return to the Co-op’s ethical and community roots. Fine. That should start by taking up the right to appoint a director to the Co-op Bank, now controlled by a hedge fund, so they can scrutinise the pay package for chief executive Niall Booker, who could earn almost £10m over the next two years.