You are right to remind us “that no-one can reliably foretell the future” regarding the oil industry in Scotland (Leader, 12 March).
Current investment may well result in higher levels of oil production in the next few years.
It makes sense for governments, oil companies and others to have estimates about the future of the industry. Predictions about production levels over the next few years are likely to be reasonably reliable.
The same might also be said about production costs.
Estimating the future oil price is a very different proposition. Oil is a world commodity which is highly tradeable. Its price depends on world supply and demand.
Price is fundamental to future potential levels of government revenue from oil.
The price of our offshore oil and gas has been quite volatile over the years. But much more important than being volatile is the fact that the price is unpredictable. That is what is important. Volatility in this context is about the past. Predictability is about the future.
(RT Hon) Gavin Strang
(Former UK oil minister)
Western Harbour Place
I read with dismay how all parties continue to follow the premise that the oil is either going to make us richer, or poorer, depending on whose view we take on whatever the price of oil will be or how much of it there is.
We continue to use this income as a short-term policy (it’s not going to be around in 50 years) to either increase the welfare state we use, or to reduce taxes that we pay for the state we currently have.
It’s all spend spend now, and not a drop of that income for our children or our children’s children. Let’s just spend it while we’ve got it!
What if we start to consider that actually the oil is a bonus and whatever income it generates should be set aside to create a country we’ll be proud of in a hundred years’ time. That means that we have to learn to tax ourselves to pay for the state we choose to have.
That’s a vision I would vote for. It’s a pity that none of our politicians or parties are willing to be this radical. Maybe there’s still time before next year’s vote.
Yogi Berra allegedly once said that “prediction is very difficult, especially when it is about the future”.
This is most noticeable in weather forecasting, where a forecast of a flurry of snow turns into a weather report and the forecasters look out the window and see three inches of snow on the ground. Much the same can be said of Alex Salmond’s forecast of rising North Sea oil revenues which will be amended to a report of zero growth after he looks out the window to find the circus has left town when a more easily developed field is found off the Scilly Isles.
If an independent Scotland’s finances are predicated on future oil revenues then the Yes campaign is already dead in the water (of the North Sea).