Commonsense on oil prices and the Scottish economy
At the beginning of 2016, oil prices were at their lowest ebb of $27. Detractors of Scottish independence used this low figure to support their arguments in the same unrealistic way supporters had when the price was high, at $115. At the time, well-known Scottish journalist Kevin McKenna placed into the benefits to the Scottish economy from oil and gas production into context. He pointed out that low oil prices are obviously good for other parts of industry, and of course that while oil and gas remain important assets, they represent a very small part of the Scottish economy.
At the beginning of 2017, have, as most analysts predicted, recovered somewhat to $53. And long-term predictions are for further recovery through to 2020, with prices then sitting at perhaps around $80. Of course, its unknowable exactly what the price will be in the next few years, but from a political perspective it would be super if politicians on either side of the Scottish independence debate simply proceeded with commonsense. The oil price can be volatile, yet if we made our national planning assumptions based on commonsense then we’d have a more coherent debate across the board.
Plain commonsense suggests that oil is not the be all and end all of the Scottish economy by any stretch. It does lead us to the reasonable conclusion, though, that many jobs will exist in oil, gas and chemicals for some years to come and taking joy in lay-offs – as some people appeared to when prices were low – is decidedly uncool. Commonsense, too, suggests that prices in the coming years will be neither impossibly high – because that would harm the industries in any case – nor depressingly low.
Perhaps 2017 will be the year when the benefits of oil and gas extraction to the Scottish economy were not distorted in either direction, but simply maximised wherever possible in the interests of regular folk…..