Sunday, 7 April 2013

When the Nationalists don't follow Norway's Example

I'm not saying I'm an oil expert, although I do have a degree in Economics that can help me understand both the macroeconomic and microeconomic consequences of actions. But Ian Taylor is a man who understands the oil industry. He is Chief Executive of oil and gas trader Vitol Plc.

One of the things we hear about from the Nationalissts is that post-independence the oil revenue will allow an independent Scotland to build up an oil fund like the one that Norway has been stockpiling for the last 30 plus years. Indeed Norway is often used as an example by the SNP as to how their model of Scotland will work.

However, as Taylor points out in today's Sunday Herald there is one place that the Nationalists are not following Norway and that is forecasting oil prices.

"Norway, so often held up as an example, are planning on an oil price of $77 a barrel in 2014 compared to the SNP's 'cautious' estimate of $113. Make no mistake – such over-optimistic assumptions would come at a real cost.

"The cash gap between peak and trough of oil revenues in the last decade is equivalent to the entire budget of the NHS in Scotland. I ask everyone reading this to consider one question. What if the Nationalists' optimistic projections are simply wrong?"

That is some gap! That is some hole in the budget for an independent Scottish economy that wants to base itself so dependently on oil revenue. That is something that doesn't need a degree in economics to tell you is going to be disasterous.

1 comment:

  1. You do worse than look close to your new home at the oil funds which Orkney and Shetland councils set up. Both were as I recall designed to cushion the Islands against the day when the oil ran out, to regenerate the terminals on Flotta and Sullom Voe and as it happens for the interest to be used for the benefit of the Islands. The island politicians were rather more far sighted than those at Westminster where Tory profligacy squandered the oil wealth on tax cuts rather than investment. With the questionable state of the putative independent Scotland's finances, is it credible to believe the SNP would do different in practice?