Scottish independence: Low oil prices would have been of benefit to an independent Scotland

 
Alex Russell
Oil revenue is the icing on the cake of the Scottish economy (Source: Getty)

On 18 September 2014 Scottish voters threw away the opportunity to take control of their own destiny by rejecting the idea of breaking away from the overpowering influence of Westminster.

The reasons for the "no" vote are many and varied. But fear was high on the list of factors as many pensioners were consistently reminded by the media that their future pensions would be seriously in jeopardy, their houses would fall in value and in any event they wouldn’t even have a currency that would be acceptable anywhere.

It worked.

The fact that 98 per cent of the remaining 24bn barrels of oil in the North Sea lay in the Scottish part of the UK Continental Shelf was dismissed as being more of a liability than an asset in an independent Scotland. The argument used was that the oil industry would shut up shop and go elsewhere.

Read more: Scotland's business climate is calling for independence

Well, at least that is well on the way to happening despite the ‘no’ vote. According to Oil & Gas UK, the industry’s representative body, over 65,000 jobs have been lost already in the past year.

And the knives have been out in force as unionists and non-SNP political parties rejoice in their analysis of the devastating impact the plunging oil prices would have had on the economy of a separate Scotland.

There is some logic to their argument. Oil at $47 a barrel will raise less revenue than oil at $114 a barrel. But, and it is an enormous but, if Scotland had voted "yes", the first conversation that Holyrood would have had with George Osborne would have been along the lines of this:

“Everyone, including Oil & Gas UK, the Department of Energy and Climate Change (DECC) and the so called independent Office for Budget Responsibility, tell us the future cash flows from the North Sea are negative with oil at less than $50 a barrel. So, how much will Westminster pay us to take over this liability?”

Read more: A yes vote would have plunged Scotland into a deep depression

It is precisely those types of negotiations that are overlooked in all the current media hype around what the impact of low oil prices would have had on Scotland’s economy.

A low oil price in the aftermath of a "yes" vote , I believe would have secured less of a burden for Holyrood with respect to Scotland’s share of the national debt; the change of ownership of the North Sea oil and gas reserves would have been a bargain basement buy.

Oil revenue is the icing on the cake of the Scottish economy. There would have been some manageable short-term economic pain resulting from the current low oil prices. But, oil prices will rise in the future and the North Sea assets would be better protected in an independent Scotland.

Don't agree with Alex Russell's argument? Why not read Ronald MacDonald's claim that Scotland would be worse off under independence

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

Related articles