Black Gold is not able to make Scotland sparkle - Jim Duffy comment

Black Gold, as it is referred to by traders, has most definitely lost its shine.

Oil is a dirty business and the world is in danger of coming to a standstill, says Duffy. Picture: Jeff J Mitchell/Getty Images.
Oil is a dirty business and the world is in danger of coming to a standstill, says Duffy. Picture: Jeff J Mitchell/Getty Images.

Oil prices have tanked. A barrel of Brent Crude saw highs of $120 (£96) but now languishes at $20. And as the reporting season kicks off with the big oil companies posting massive losses, I have to ask, who in their right minds thought Scotland could base its whole independence monetary strategy on oil?

Alex Salmond has gone now and John Swinney no longer runs the purse strings. Theirs was the manifesto that was built on a strong, vibrant and lucrative oil price. Not to mention a bit of wind and some tidal power thrown in for good measure. But the oil business is a dirty business – quite literally – and the world is in danger of coming to a standstill as we have relied so much on this commodity to drive it.

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Where does this leave Scotland now? Quite rightly, any talk of independence has been shelved as we steer a path through the coronavirus pandemic. Politicians are now properly focused on what matters – health, care, jobs and people and not their lofty ambitions for this policy and that argument. But make no mistake, it will rear its head again as soon as the special advisors think we can stomach it.

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Scotland’s First Minister has shown she can lead from the front in this crisis. When the chips are down, Nicola Sturgeon appears to be up to the task, unlike many of her colleagues down south, who look decidedly uncomfortable at the daily briefings. So, Scotland actually looks now like it has a proven leader – for an independent Scotland.

But being a leader is not enough in this new world that we will inhabit again. What this pandemic has shown is how the globalised economic world actually operates. We have had a front seat at the economics lecture where we observe the fragile and sensitive nature of the world economies as they interact with each other.

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These huge financial tectonic plates where oil, debt, corporate bonds, treasury bonds, markets and governments all interplay are not built on sound fiscal policies backed up by assets. They are all financial instruments that rely on debt, consumer confidence and yes, more debt. And an independent Scotland, I would argue, would be up to its rear-end in expensive debt.

Discrepancy

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All we have to do is look at the Eurozone to see how badly managed our potential new “pal” actually is to see how crazy it would be for Scotland to join it. The north of Europe, or as many refer to it – the “powerhouse” – is not really all that happy about having to shore up the south. Many in the north like Holland and Germany see the south as “lazy” and not doing enough to pull its weight.

They are sick of bailing out their southern neighbours who many believe like their fiestas and siestas way too much. So, the current stimulus package has taken an age to push through and I suspect that while a united front is what is being touted, there are many in Europe who will sign it off with a chip on their shoulder. No, Europe is no place for Scotland to be in the next decade. It is potentially a busted flush.

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So, where does that leave Scotland now as the Black Gold tanks and the industry in and around Aberdeen looks to be teetering on the edge. Even if oil jumps back to $65 a barrel to make it even worth drilling for, the industry players may just call a halt in the North Sea and put it in the “too difficult” bucket. Not ideal for Scotland and its coffers in an independence scenario.

Of course, it can nationalise the industry, but the track record is not great here. Buying ailing airports and ferry businesses is all well and good, but oil infrastructure is a different ball game.

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I’m afraid I do not have any pearls of wisdom to shed on the matter. Really just a warning that Scotland needs to be very careful coming out this pandemic not to rush into an independence debate that could throw any potential UK-wide recovery off kilter. And most definitely do not put any reliance on the Black Gold to shore up the coffers in the long term.

Jim Duffy MBE, Create Special

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