The Scotsman (Leader, 13 June) hit a new level of absurdity when praying in aid of the Office of Budget Responsibility (OBR) forecast of “a dramatic fall in North Sea oil revenues over the next 25 years”.
Forecasting the direction of the price of any basic commodity over the next 25 years requires a total understanding of the global economy, and society, not now, but in the future.
Here are some of the things a forecaster needs to know for certain: the consequences on its growth of China shifting to another economic model; will the eurozone continue to see the triumph of politics over economics; how will QE be unwound in the short or long term; how will Japan escape if ever from stagnation; whether the US is in relative decline; what effect will Narendra Modi’s policies have on India in the long term; will the Philippines and Vietnam continue on a growth path; what effect will Indonesian politics have on its economic performance; will Africa develop its full potential; when will recessions occur and how deep will they be (not to mention wars and rumours of wars as states in Asia jockey for position).
All that has to be understood and assessed in any forecast about oil. That you should believe the OBR capable of such brilliant, indeed unique analysis, shows you are, in a big way, subject to the wish being father to the thought.
Twenty-five years? The OBR record shows it is pretty useless at forecasting much shorter, and more measurable time scales. Its forecast for UK economic growth between 2010 to mid-2012 was 5.7 per cent, whereas it was 0.9 per cent. Its forecast for 2012 was 2.8 per cent growth, it was 0.3 per cent. For business investment its forecast was 10 per cent for 2012, it was 0.4 per cent. Your leader claimed the SNP is “facing a red card”. Look in the mirror.