Judging by the figures, the economy of Groningen is getting a huge blow in the latest report from Statistics Netherlands. A shrinkage of 13 percent. Fortunately, we don’t have to lose sleep over it right away, reveals chief economist Peter Hein van Mulligen.
Due to the closing of the gas stall, the economy in the province is getting smaller and smaller, the Central Bureau of Statistics calculates. In the second quarter, it contracted by 13 percent compared to the same period last year.
If we zoom in on the part of Groningen where gas is extracted, the figures are even worse. In that part of the province, there is a shrinkage of 15 percent. In Delfzijl and the surrounding area, where a lot of industry is located, the size of the economy decreased by four percent. This is mainly because part of the industry there has reduced production in view of the high energy prices.
According to Statistics Netherlands, the sharp contraction in Groningen differs considerably from the picture in the rest of the country. The differences between the other provinces are limited. In Zeeland, Overijssel and Limburg the economy contracted by approximately 1 percent. In Fryslân, Flevoland, North Holland, North Brabant and Utrecht the economy grew slightly by 1%.
Gas production has been scaled back considerably
Chief economist Peter Hein van Mulligen of CBS says that the people of Groningen should not lose sleep over the gloomy figures. “It is statistics, we have to map the economy according to a certain method. Those rules are quite precise and the same everywhere, we cannot just change them. Mineral extraction is allocated to the area where it is extracted. Gas extraction has been scaled back a lot and that counts for the gross domestic product of the province of Groningen.”
“Without gas extraction, Groningen is doing reasonably well and is even growing slightly. Then you see a different picture. The figures mainly say something about the share of mineral extraction. Although it is true that Delfzijl and the surrounding area are an exception. This is due to the industry there, which uses a lot of energy. Some of them have been closed for some time or produce much less and that has an economic impact. Businesses close and people lose their jobs. That’s real economics,” he adds.
The average Groningen citizen has no use for gas extraction
Incidentally, there were also years in which gas was extracted in abundance, even though the Groningen economy was not exactly flourishing. “The average Groningen citizen was not interested in gas extraction, they did not notice it. He was only bothered by the earthquakes”, says Van Mulligen.
In that respect, the figures next year will be more realistic, he says. After all, the gas tap in Groningen will close at the end of this year and the declining gas production will no longer be included in the calculations for the regional economy. “That gives a more accurate picture.”
Last week it was announced that the Dutch economy has entered a mild recession. Compared to a year earlier, the volume decreased by 0.3 percent.
Emergencies
Gas extraction in the Groningen field will stop on 1 October this year. Incidentally, the last eleven production locations will not be definitively decommissioned until October 1 next year. Until then, they are kept on hand for any emergencies, such as an exceptionally cold winter, which is accompanied by the failure of one of the gas storage facilities used as a buffer.
Sixty years of gas extraction in Groningen yielded a profit of 428 billion euros. Most of that, almost 364 billion, went to the state. The NAM raised more than 64 billion. This was shown by Shell calculations last year. The gas revenues for the state flowed directly into the treasury. In the 1980s, they often accounted for more than 10 percent of the total national budget.