Devastating cost of global oil price fall to North-east revealed

Unemployment has rocketed, house prices have fallen and fewer businesses have been set up in the North-east as a result of the dramatic fall in the oil price, a new document shows.

Unemployment rose by 69 per cent in Aberdeen and 92 per cent in Aberdeenshire as a whole in the year up to January. Picture: Ian Rutherford

A briefing prepared for MSPs by the impartial Scottish Parliament Information Centre (Spice) has outlined the devastating impact the oil price slump has had on Scotland’s off-shore industry.

The report shows unemployment rose by 69 per cent in Aberdeen and 92 per cent in Aberdeenshire in the year up to January.

Researchers focused on the economic impact of a 72 per cent drop in the average price of a barrel of oil, from $106.77 (£76.50) in July 2014 to $30.70 (£22) in January this year.

They looked at the “claimant count” in Aberdeen and Aberdeenshire, which includes people claiming Jobseeker’s Allowance and those claiming Universal Credit who are out of work.

The report noted that almost 10,000 redundancies have been announced by oil and gas companies across Scotland.

Despite the increase, the unemployment rate for both Aberdeen and Aberdeenshire remains below the Scottish average.

The research found the annual change in residential property sales in the north-east has been negative for the last 18 months, in contrast to Scotland as a whole, where it has been positive for the last nine months. The performance of North-east property over the last few months was in stark contrast with the lively market experienced before the price of oil dropped.

Yesterday, Scottish Labour leader Kezia Dugdale said the falling oil price had had a “traumatic” effect on the North-east economy.

Speaking during a visit to Aberdeen Chamber of Commerce, Ms Dugdale, who grew up in the city, said: “Thousands of jobs have been lost and firms have gone out of business. This is one of the toughest times the oil and gas industry has ever faced. The new analysis produced today by the independent experts at the Scottish Parliament paints a stark picture of the devastating toll the oil price crash has taken on the area.”

Energy Minister Fergus Ewing said: “The Scottish Government will continue to do all it can to support the sector through our devolved powers during the current downturn, being exacerbated by a low global oil price. The First Minister recently announced a £12 million Transition Training Fund to help former oil and gas workers transition into other roles in the sector or the broader energy and manufacturing industries, and it will also help bring those skills and expertise into teaching.”