Alex Salmond’s oil dream goes bust

Alex Salmond’s dream of an independent Scotland based on North Sea oil revenue to keep it afloat was dealt a fresh blow last night as new research by the Office for Budget Responsibility showed the extent of decline in revenue from North Sea oil taxes.

Alex Salmond 3

Alex Salmond’s dream of an independent Scotland based on North Sea oil revenue to keep it afloat was dealt a fresh blow last night as new research by the Office for Budget Responsibility showed the extent of decline in revenue from North Sea oil taxes.

In its Fiscal Sustainability Report for July 2013, the OBR has concluded that the total amount the UK could expect from taxation between 2018 and 2041 from oil revenue was £56 billion, down from the £67 billion last year.

The report goes on to continue:

“Revenues from the UK oil and gas sector fell from 0.7 per cent of GDP in 2011-12 to 0.4 per cent in 2012-13 and are forecast to reach 0.2 per cent of GDP by 2017-18. Our central long-term projection shows revenues falling to 0.03 per cent of GDP over the subsequent two decades. Sensitivity analysis suggests that this broad conclusion holds across a variety of reasonable assumptions for the sector.”

The figures are likely to raise yet further questions over the feasibility of the SNP’s ambitions for independence, based as they have long been on an assumption by the Scots Nats that the good times from oil revenue will somehow keep going.

Declaring it to be “madness” to base independence on the basis of North Sea oil, Alistair Darling as leader of the Better Together Campaign has declared:

“Today’s figures confirm that revenue from the North Sea makes an important contribution to our economy, but that contribution is declining.

“It is absolute madness for the SNP to base their case for separation around a commodity that is declining and volatile.

“The SNP promise the earth on public services, welfare, pensions and an oil fund off the back of oil and gas revenues. Yet the OBR’s figures make clear that revenue from the North Sea is declining now and over the long term.”

Challenging the first minister to level with the public, Darling continued:

“Alex Salmond must explain to the Scottish people how all his promises would be funded if his forecasts turn out to be wrong. What public services would be cut if the reality doesn’t match his rhetoric?

“We know that privately the SNP accept the OBR’s figures, yet in public they cook the books and predict an oil boom. It is simply not credible and more and more people in Scotland recognise this.”

Backing up Darling’s argument, the Lib Dem chief secretary to the Treasury, Danny Alexander declared:

“Scotland has a thriving oil industry that plays a key role in the UK economy. But independent forecasts like the OBR’s consistently show oil revenues are set to decline in the long term – a fact confirmed by John Swinney’s secret internal analysis.

“This would leave a massive gap in an independent Scotland’s finances. Scotland is better off dealing with a volatile resource like oil in the UK.”

Seeking to spin their way out, a spokesperson for the Scottish government has responded:

“There are estimated to be up to 24 billion barrels of oil remaining with a potential wholesale value of £1.5 trillion remaining in the North Sea which means, by value, more than half of North Sea oil and gas resources have still be to be extracted.

“The OBR’s central forecast is cautious and relies on both production and price forecasts below the levels assumed by industry and other independent bodies.

“The report shows that adopting the latest industry production forecasts could boost future tax revenues by £17.4bn above the OBR’s central forecast, whilst assuming prices follow a path similar to that assumed by the International Energy Agency would boost future receipts by £25.9bn.”

42 Responses to “Alex Salmond’s oil dream goes bust”

  1. Richard Lucas

    Another rebuttal of your imperialist mindset: http://www.businessforscotland.co.uk/the-truth-about-scotlands-oil/

  2. John Ruddy

    Is John Swinney’s views on oil also neocolonisalist tripe from London? We know he believes oil is too volatile a revenue stream to rely on, and that if Scotland is create an oil fund cuts will have to be made.
    Except thats just what he’s told his cabinet colleagues in private…. not what he admits in public..

  3. MurrayMcC

    Interesting support for George Osborne’s OBR baby being shown here. Only a few weeks ago George’s boss and Unionist Commander in Chief PM David Cameron was saying that North Sea oil was a real jewel in the crown of the UK economy.

    I guess the BritNats fear any loss in revenue that limits their burning desire to have nuclear weapons and strut the World stage. Labour and the other conservative parties are adopting plan B for that though – more austerity, financial penalties on the vulnerable, and [the classic] attacks on single mums. The elderly are next in line in this ugly race to the bottom. Mind you who cares about the poor, old and vulnerable?

  4. Robert Bryce

    Didn’t Alistair Darling berate the OBR in 2010 in the FT and describe it (and I paraphrase) as some kind of tory mouthpeice created by tories for tories? Strange now that we’re debating independence that it has become the preeminent authority on global oil prices?

    If they can predict this then why can’t they predict the price of a stamp in an independent Scotland or the cost of mobile phone roaming charges or even the price of cheese in an independent Scotland? Better Together could have all their questions answered by the OBR’s very own “Septic Pegg” and we could all make our decisions and move on.

    The truth is that they are at total odds with the oil & gas industry figures, the OECD’s figures and anyone else who has had a go at predicting oil prices. The OBR are barely able to predict yesterday’s weather and their track record PROVES it.

    If the industry accepted their figures then we would not be seeing record investment in North sea oil. It really is that simple.

    Once again we are being lied to by a Westminster government that will do anything ensure they don’t lose their wee cash cow aided and abetted by a parcel o rogues that all Better Together members are.

    If your average non politicaly aligned joe mug such as myself can see through the spin then so will the rest of us.

  5. Mboyle1888

    For a supposedly left wing, progressive site, you seem to always be very biased towards the union + Scotland being ruled by a tory government that they never voted for. Not a mention of Scotland’s massive renewable energy potential, as well as trying to portray the SNP and independence as one and the same thing. Neo-colonial mindset indeed.

  6. Mboyle1888

    Of course oil is too volatile a revenue stream to rely on entirely, but you cannot deny the massive advantage it is. Gideon himself described Scotland’s oil as the “jewel in the crown” of the UK economy just a few weeks ago. They take different views on it in private than they do with their “Better Together” public scaremongering

  7. pictishbeastie

    It’s always worth a wee look to see exactly where some of these commentators are coming from with their unionist guff. I am, of course, thinking about Councillor John Ruddy. Have a wee look at his bio section on his own blog and you’ll get an idea of why he doesn’t think we should be allowed to run our own country!

  8. Alec

    Neocolonialism? Even in terms of your own argument, Scotland has been part of the UK since long before the rise of Empires.

    You really need a new joke book.

    ~alec

  9. Nick Durie

    “Right from the start the Tories used the OBR not just as part of the government but as part of the Conservative Party. They have succeeded in strangling what could have been a good idea at its birth.” — Alistair Darling in 2010

    Interestin tae see left foot forward gaun fit for fit wi the Tories, eh no? 🙂

    You austerity mongers will lose the referendum because you offer nothing but fear and the prospect of the end of the vestiges of the welfare state.

  10. Alec

    Business for Scotland, like Newsnet Scotland, is a group of like-minded volunteers who present their own views… like Leftfoot Forward.

    Are you going to contribute to the discussion, or are you simply trolling in an attempt to up the clicks on your favoured blogs?

    ~alec

  11. David McAnenay

    Had to laugh when I read this. Went onto BT website to see the other point of view. It’s worrying that propaganda machines (ie. BY) point to other propaganda (this site) as a legitimate source. Still waiting on this positive case they claimed we were going to get…

  12. David McAnenay

    * BT bloody phone.

  13. TheMushyPea

    As important from a ‘Left’ perspective is the impact that oil could have on a separate Scotland, where it would account for about 10%-20% GDP depending on who I listen to. On the good side it could fund social benefits and investment in people. On the bad side it could leave the country at the mercy of global oil companies, forever catering to their needs. It could also provide an overlarge a ‘electorate-free’ source of income, weakening the need to invest in country and turning the government into rent-seekers, particularly when combined with other natural resources like fish and renewables. Combined with a stated aim of lowering corporation taxes below rUK, this places any progressive agenda at risk. Not saying that would definitely happen, but the track record of oil-based economies is nor great.

  14. Iain Macmillan

    So, according to your argument, there were no empires before 1707? History really isn’t your strong point, is it?

  15. Alec

    Your strawman also thinks that the Great War started because a bloke called Archie Duke shot an ostrich because it was hungry, Iain.

    ~alec

  16. Alec

    PS Is it you who’s marking down all my comments? It’s all very playground “you smell” innit?

  17. Pa broon

    The track record of oil-based economies is not great?

    Norway holds in its oil fund 1% of all global equity markets, its worth close to half a trillion quid.

    Norway is the nearest comparable example, we can’t be compared to middle east economies because the system of politics is so different. Even if what you say was true, Scotland would be less reliant on its oil & Gas resources than Norway because in Scotland, it accounts for less of our GDP than in Norway.

    I will agree though, it’ll be important (imperative) not to sell out to rapacious oil companies on Independence. We need to guard against that with some sort of constitutional measure.

  18. JohnMcDonaldish

    More embarrassing tripe from people who want the people of Scotland to vote No. Do you take us for complete idiots?

    Norway’s economy is more dependent on oil than Scotland would be come independence. And they are a real basket case, aren’t they?

    And didn’t Darling rubbish the OBR recently? What a scaremongering tosh merchant.

  19. orkers

    Labour colludes with the Tories to lie to the people of Scotland.
    Two cheeks on the same English led arse.
    The founding fathers of Scottish Labour must be whirring in their graves.
    Shame on you for printing such a pack of transparent lies.

  20. taranaich

    England already had substantial colonies in Ireland, the West Indies, the Americas, India and Africa before the foundation of the UK.

  21. Alec

    You’ll find that Scottish interests were instrumental in setting-up many of those colonies, especially in Ireland. You also will find out there was negligible presence in India and Africa prior to 1707. It’s arrant nonsense – more-than bordering on racist garbage – to try to exculpate Scotland’s involvement with the former, and ahistorical claptrap to claim the latter.

    Plus, as I said, youse really need a new joke book. As I have no doubt whatsoever, you and Iain knew full-well which Age of Empire I was referring to. Colonialism doesn’t become neo just by hanging around for a few years extra.

    Scotland pre-1707 was not a social democracy with the francize given to anything more than a tiny fraction of the adult population, and colonies don’t get be absorbed into the territory of the Mother Country with representatives sent to the main Legislature. The 13 Colonies in North America fought a war over that concept.

    Your interjections have no merit, and simply are cases of playing with words plus purposefully misrepresenting those of others.

    Now, out of interest, are any of youse Cybernats going to return for a second comment or is this a concerted drive-by shooting? It suggests none of youse are committed to open debate.

    ~alec

  22. David Myers

    “Bordering on racist” Looks like you need a dictionary…

  23. David Myers

    Such stories really do make me laugh. If oil is such a volatile asset that cannot be relied upon to provide revenue, please explain to me how the hell Norway (an independent country in which oil makes up a larger proportion of GDP than it does in Scotland) is in such a healthy financial position and runs at a budget surplus year on year. And why did Cameron extol oil’s value so highly only a week or so ago? London’s oil good, Scotland’s oil bad?

  24. Alec

    #screech#

    #bang!# #bang!#

    “C’mon, pal, leg it!”

    Of the 23 comments thus far on this thread, over a dozen are from an equal number of different individuals whose only input has been sniping. NOT ONE OF YOUSE has shown the basic manners to return for a second comment or even to respond to direct questions.

    Which e-alert did youse receive?

    Basically, intellectually impoverished and conducive to open debate/democracy and, above all, thuggish.

    ~alec

  25. Alec

    To be perfectly frank, David, I don’t think you merit the compliment of a rational opposition. I don’t believe for an instant that you like your fellows – who will be along in a mo’ to up-vote your comment, and down-vote mine – are arguing in anything remotely similar to good faith.

    Cybernats, Shmybernats, it doesn’t really matter what your front-reason is. Basically, this is an exercise in thread-wrecking and display of anti-democratic tendencies.

    ~alec

  26. Dakiro

    While there is still revenue, there is time to invest in sustainable, stable and inexpensive technologies which will stay with us for generations after the oil and gas becomes to expensive to be used as fuel. I mean, of course, nuclear 3rd, 4th and future reactor generations.

  27. Patrick Roden

    To use the OBR reports as evidence, when you yourself discredited them and described them as set up by the Tories, to support Tories arguments, shows Alistair Darlings complete and utter lack of credibility.
    This will haunt him for a long time.

  28. Alec

    In essence, the OBR is stating that the North Sea oil boon has peaked and that future supplies either will be declining rapidly or more and more expensive to extract. This is independent of its economic positions, and could be confirmed/refuted fairly easily.

    D’you have a response either was or will you… oh, look, the Tories!

  29. Baxter Parp

    What are youse on?

  30. Baxter Parp

    Nice to see the right-wing left foot forward toeing the Tory OBR line.

  31. Alec

    Not interested in your impression of Toad of Toad Hall on his little motor car, parping his horn and vanishing into the haze.

    Engage with and contribute to the discussion, or find someone else to troll.

    ~alec

  32. Baxter Parp

    Stop saying youse and I’ll take you seriously.

  33. Alec

    No, it’s what happens outside sub Sixth Form common rooms. Grown-ups discuss things without letting lippy teenagers (of all ages) derail the discussion.

  34. Alec

    Don’t believe you. I think you’re a thug and polemicist who has no interest in honest debate.
    I can write in whatever voice I like. At least, for a start, I’m not writing in the poorly enunciated English which some Cybernats think is Scots dialect.

    Goodness how you read a novel.

  35. Guest

    Plus, I notice that you’re up-voting your fellows’ comments and down-voting mine. Do you not think your demands that someone write in your prescribed manner would carry more credibility if you weren’t patently employing this infantile tactic?

    ~alec

  36. Baxter Parp

    Hello Alec, would you like me to tell you how the internet works?

  37. Alec

    Who died and put you in charge or propriety?

    Idiosyncratic spellings or even occasional spelling mistakes are commonplace on blog discussions. Unless you are a stenographer you are in no position to complain about them, and using them as a pretext for refusing to engage with someone (you could have signaled your displeasure by not chuffin’ well commenting in the first place) is a hallmark of a spiteful buffoon whose principal goal is to humiliate others.

    ~alec

  38. Baxter Parp

    Yes indeed – “Right from the start the Tories used the OBR not just as part of the government but as part of the Conservative Party. They have succeeded in strangling what could have been a good idea at its birth.” -Alistair Darling.

  39. jimbo

    Here we go again, ad nauseum. ‘We have oil and isn’t that a bad thing’ blah de blah.
    Btw – news coming in – all fossil fuels are in decline because they are *being used up*!!!
    Non news story again by bitter ……

  40. Angus McLellan

    The Fiscal Sustainability Report is a long document. It says lots of things. The New Statesman’s ‘Fiscal outlook in five charts’ piece does a nice job of summarising it. This article does not.

  41. Aitch-Aitch

    Disgraceful article…just a faithful re-quote of the usual unionist mantra of lies, deceipt, disinformation and spurious slander..LFF..you should be on the side of the working man not regurgitating Tory managed garbage.
    i really do wonder at times where on earth a challenging, non-partisan media is these days, when even the LFF stoop this low. appalled really.

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