It is no secret that oil is an economic weapon, the same as sanctions, boycotts, and trade tariffs. A barrel of oil could rise dramatically tomorrow if certain governments convened today and directed the price upwards.
That they don’t choose to do so is what the situation is about. Same thing with the referendum when the volatility of oil prices was employed in favour of remaining in the Union.
The economic prosperity that was said then to be safer within the Union because Scotland would be overly dependent on a high oil price doesn’t seem so cast-iron secure after all.
There are no reports of food banks closing because of lack of customers, but plenty of reports about house repossessions and people unable to keep their houses above hypothermic temperatures. Houses heated by oil, one would conclude, must be enjoying some advantage.
The First Minister, her predecessor and the current finance secretary toured the country during the referendum campaign arguing that they needed the financial levers and in particular the control of “Scotland’s oil” to advance the prosperity of the people and the country and of course this was all based on an oil price around $110 per barrel.
Now that the price has fallen to around $60 per barrel, the First Minister declares in parliament that “the sector wants us to unite to call on the UK government to accelerate investment and for the UK government to increase support for innovation”.
Is this the same UK government that was the root cause of all of our problems during the referendum campaign?
It is less than three months ago that fortunately 55 per cent voted to stay in the Union and we are therefore able to address the current situation in a “united” way as asked for by the First Minister. What on earth could she have done had the false promises of independence won through?
Is it credible that government didn’t see this “crisis” in the North Sea oil industry coming.
Two years ago, Peter Jones in The Scotsman said: “The world is bursting with oil and gas.”
Moreover, to start the 2012 New Year he predicted falling prices as supply continued to increase. Not even political turmoil in the Middle East, nor sanctions against Russia, have interrupted increasing supply.
Doesn’t this beg the question: why didn’t these facts become part of the contemporary political narrative?
Of course with hindsight we see clearer, but surely the industry should have been cognisant of the problem. Pumping North Sea oil out was getting more difficult and costs of production were inexorably rising.
Concern in particular is expressed over rate of pay, ranging between £300 and £2,000 per day for contractors. The crucial issue for the North-east economy is to ask: what is to be done?
It is doubtful if tax concessions will be sufficient to head off an impending “huge crisis”.
Arguably, from the viewpoint of public ethics, a stake in the North Sea for taxpayers should be the price of any financial help.
Old Chapel Walk
Suddenly the world is awash with oil at below $60 a barrel and it could fall even further.
A surge in production and weaker global demand for crude have sent oil reserves soaring and prices tumbling.
This is good news at last for consumers, industry and motorists but environmentalists and the renewables industry will not be at all happy. The reason? Cheaper oil and gas will make it even harder for Britain to achieve its pie-in-the-sky but legally binding targets to cut carbon emissions.
The argument for renewables subsidies was that they were temporary in that fossil fuel prices would get too high while expensive renewable subsidies borne by industry and households would be reduced.
European nations have already slashed renewable subsidies and turned to cheaper gas, coal and oil to grow economies. Britain, to survive, must do the same.
At last I understand Nicola Sturgeon and Scottish nationalism.
When the oil price is high, it’s Scotland’s oil, and when the oil price is low MSPs must call on the UK government to take decisive action in support of jobs.