The UK government and the UK-based parties try to talk down Scotland’s oil wealth today, just like they talked it down and hid the truth from the moment the oil was discovered in the 70s (see Chapter 1). Labour and Conservative politicians said at that time that the oil would run out by the late 1980s, and they’ve been constantly predicting its end ever since.
But in July this year, Professor Sir Donald Mackay, of the pro-devolution think-tank Reform Scotland and an economic adviser to the UK government for 25 years, said that Westminster’s figures were underestimating the true value of oil by £8 billion a year.
“Mackay points to official forecasts by Oil & Gas UK which suggest an independent Scotland’s revenues in 2017-19 would be almost £32bn, double the £15.8bn forecast by the Office for Budget Responsibility.”
“He says there is no hole in the Scottish government’s oil predictions, as Danny Alexander, chief secretary to the Treasury, has claimed.”
£8bn a year is enough to completely wipe out even the No campaign’s most pessimistic assessment (£7.6bn) of an independent Scotland’s deficit and give Scotland a large budget surplus.
Oil will of course run out one day. But even if we count only the oil we already know about, it’ll last for many decades. And industry experts believe it’s likely that there are large new deposits yet to be found, including off the west coast which oil companies have been forbidden from exploring until now because of the presence of Trident submarines in the area.
Also, in 2013 oil tycoon Sir Ian Wood published a report - commissioned by the UK government’s Department of Energy and Climate and based on discussions with major oil companies - which found that reforms of the industry could further boost revenues by an extra £10bn a year for the next 20 years.
That’s plenty of time to use the money wisely for Scotland’s long-term future, instead of wasting it as Westminster has done for the last 40 years - the UK and Iran are the only two countries in the world to discover oil and NOT set up an oil fund for the future.
(Norway only set up its oil fund in 1990 and it now stands at over £500 billion. The country’s main economic “problem” is that it has too much money.)
But that future can still be bright. Scotland is richly blessed with the potential for clean renewable energy, which will last forever. Investing some of the proceeds from oil in wind, wave, tidal and hydro power over the coming decades will ensure Scotland stays a very wealthy country for centuries to come.
Q: “But what happens if Orkney and Shetland decide to stay in the UK, or to become independent themselves?”
A: Orkney and Shetland are legally part of Scotland, and no more entitled to their own “local” referendum result than Falkirk or Peterhead or Sauchiehall Street. They could form an independence movement and campaign for a referendum on either independence or rejoining the UK, but no such movement currently exists.
But even if they did, international maritime law would consider them to be what are known as “enclaves”, as their territory would be entirely within that of Scotland. That would mean the islands were only entitled to a 12-mile limit from their shores, and no significant amount of oil is found within those areas.