One must have a healthy Humean scepticism concerning the role of the oil industry’s new watchdog (your report, 26 February). Despite industry and government cooperation it’s a Herculean task given the complexity of global oil markets.
Clearly investors are reluctant to face the risks and uncertainty of future profits from the North Sea. Take one crucial example, global oil prices, and whether they will be heading north or south. It’s interesting that three years ago we had the information that there was “a world glut of oil”. Yet global oil prices remained over $110 a barrel until recently when the price fell precipitously to $60.
As financial economists pointed out, market information is critical for taking decisions on whether to invest.
However, as they underline, it is always imperfect information because of all the risks and uncertainties.
Apparently Scottish trade unions said the pay of the watchdog’s elite is out of touch with reality.
Arguably, it is more out of touch with reality to even have a North Sea quango when “imperfect information” on oil prices could depend on what happens in the Ukraine or Middle East.
Old Chapel Walk