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The Politics of Oil In Scotland
Posted by Euan Mearns on May 1, 2013 - 11:20am
On 18th September 2014 the Scottish People will have a referendum on their future within the United Kingdom where they will be asked the simple question: Should Scotland be an Independent Country? Yes or No.
Should the people say yes then this will not only have far reaching political and socio-economic consequences for Scotland and the rest of the UK but it will also leave the rest of the UK’s energy security in a parlous state since the bulk of the remaining oil and gas reserves of the North Sea and Atlantic margin lie in Scottish waters. Or is it that simple?
The University of Aberdeen will host a two day conference / debate on The Politics of Oil and Gas in a Changing UK on the 8th and 9th of May 2013. Entrance is free for all those who wish to attend.
In order to understand the events leading up to the current situation it is necessary to go back to 1707 when the current Union between Scotland and England was established. This came in the wake of a disastrous investment enterprise undertaken in the new world of Panama called the Darien Scheme where many Scottish nobles lost significant portions of their wealth leaving Scotland impoverished.
However, not all were in agreement and come 1745 the second Jacobite rebellion against The Union culminated in the battle of Culloden where the Jacobites were slaughtered and a period of military occupation followed accompanied by clearing farmers from the land to make way for Nobles from the South. Many fled to the colonies of Canada, America, Australia and New Zealand.
Since 1745 Scotland has been part of one of the most successful political and monetary unions in history and was part of the global super power that conquered the world. Despite this there has always been discontentment and those who saw a brighter future as an independent Scotland. In 1934 The Scottish National Party (SNP) was born with sole purpose of lobbying for independence via the ballot box.
The success of the SNP has fluctuated with time but on an ever upward trajectory. In 1999, a large number of executive powers were transferred from Westminster to the new Scottish Parliament, a move that had very broad cross party support. However significant powers remained with the UK, mainly fiscal powers, foreign policy and energy policy. The proportional voting system for the Scottish Parliament was designed specifically to not enable any single party to gain an overall majority.
The SNP were naturally in favour of devolution of power from Westminster to Edinburgh even though this did not go far enough for their cause. Under the leadership of Alex Salmond, one of the UK's most astute politicians, the SNP fared well in Scottish parliamentary elections.
The last election took place in May 2011. In March of that year, in an act of political ineptitude, UK Finance Minister George Osborne launched a £2billion tax raid on North Sea oil and gas profits which in some measure determined the outcome of the election. Come May, the SNP won a resounding landslide victory winning an overall majority in the Scottish Parliament, an event that was never supposed to happen. Whilst there was no constitutional case for doing so, the UK government could quite clearly not deny the SNP and the Scottish people a referendum vote on their political destiny. Osborne has since learned the error of his ways with sweeping reforms to the North Sea taxation system in order to encourage investment in marginal fields.
The SNP face an uphill struggle to convince the Scottish electorate to vote yes. Looking towards Europe, we can all see how difficult it is to form a successful political and monetary union. I do not want to go into the many facets of the political debate, but energy security will form a central plank. With control over North Sea oil and gas, Scotland would be an exporting nation. Not on the scale of Norway, but not far behind. England and Wales would be left in a situation similar to France, with very little indigenous oil and gas production and heavily dependent upon imports. This is the ace up the sleeve of the SNP.
But it is not that simple. Much of the remaining oil and gas reserves lie to the east and west of the Orkney and Shetland islands that are both strongly opposed to severing links with The Union. Should the Scottish people vote yes, and the Islands vote no, Salmond may be deprived of The Prize he has fought so long and hard to win.
Editor's note added 14:25 British Summer time. I received via email a fairly assertive comment pointing out that status of the Orkney and Shetland Islands may be rather different to that described above. The A to Z of Independence - Sorting myth from fact
If Scotland becomes independent Westminster won't be able to hang on to Shetland, Orkney, Rockall or any other part of Scotland (see: Shetland and Orkney).
However, even under the hypothetical circumstance that this occurred, Westminster wouldn't be able to retain control of the oil fields anyway, so ya boo sux. These matters are regulated by the UN Convention on the Law of the Sea, to which the UK is a signatory. International law specifies that a state controls the continental shelf and associated mineral and fishing rights up to 200 nautical miles (230 miles or 370 km) off its shores. When another state possesses an island within the continental shelf of this state, special rules apply.
The continental shelf off the Atlantic coast is Scotland's to exploit and develop, even if Westminster clung on to Rockall like a plook on the face of an adolescent sociopath. According to the Law of the Sea: "rocks which could not sustain human habitation or economic life of their own would have no economic zone or continental shelf." Westminster could pauchle its way to keeping Rockall, but as far as oil and fishing exploitation rights are concerned, they'd be entitled to rockall.
Neither would Westminster gain much by holding onto Shetland and Orkney. When an island belonging to one state sits on the continental shelf of another state, the islands are treated as enclaves. This matter was discussed in detail in a legal paper published by the European Journal of International Law: Prospective Anglo-Scottish Maritime Boundary Revisited
Most of the rights to the continental shelf would remain Scottish, Map 2 on page 29 of the legal paper shows the most likely sea boundaries. Westminster would be entitled only to a small zone around the islands, and the waters between Orkney and Shetland. This area contains no oil fields. If Shetland and Orkney were to remain under Westminster's control, Shetland would no longer have an oil fund. The map is reproduced here, so you can do a reverse Jeremy Paxman and sneer derisively at Westminster's pretensions.
Westminster's Shetland threat is a bluff. Westminster knows it's a bluff. They just don't want us to know too.
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I have no opinion on the politics of an independant Scotland, but there seems to be irrational optimism in the country about the future oil supply they may gain control over. There is no doubt that they are the most energy rich nation in the union, with huge wind, and tidal potential, and more than enough oil for domestic consumption for at least decade.
However, many comments on news websites suggest people are expecting a massive resurgance on the scale of US shale oil in the next few years, with the prospect of partying like its 1999 once they claw the coffers from the hands of Westminster.
They are going to be sorely disappointed.
I presume when you say "they" you actually mean Scots, we like to be referred by the people we are and not as "they". I think unless you live in Scotland you really do not have a clue about what goes on, only what you read or on forums like this but I can assure you Scotland has far far more resources than just oil. I presume you are aware how much our whisky industry is for starters, tourism another so stop selling us Scots and Scotland down the river like we are stupid people rushing for Independence when this has taken decades and decades of planning. This of course would have happened much sooner had we Scots known about the McCrone Report which was hidden from our eyes for over 30 years by the UK Government when we had an obscene amount of oil and we were planning a referendum for Independence in the late 70s. We know full well that Westminster will bleed us of all oil then pretty much leave us more destitute than we Scots already are in an unequal United Kingdom.As for the islands as mentioned by another person......there was a recent poll, I think it was UKGov poll which showed that there was a higher perecentage of people preferring to stay with Scotland rather than the UK. Please check facts first before making this a fictional forum! It irritates the hell out of me when folk that haven't a clue start to presume they know all there is about Scotland!!
When bad people attack the offshore rigs I guess Scotland can't expect help from the Royal military forces. I have a better idea ... get rid of Salmond. I recall he boasted about tidal power and other new energy sources. Fairly easy to do when you have plenty of oil and gas to fall back on. One day the fossil energy will all be gone. Then what?
BTW my great grandfather was from Nairn so I'm criticising kin.
Hah! Your great grandfather! I'm guessing you're from the US? Wherever you're from, I'm sorry but you've not got much more kin with Nairn than Zimbabwe, no matter what the Scottish tourism board tells you.
Great Briton shipped many people to Australia to get rid of them.
on the politics side the people of Scotland will not gain freedom - Alex Salmond is clever and he'll line his own pockets with Euro gold by taking the Scots straight into the Euro zone.
On the side of resources - as others have posted Scotland will well to harbour its oil and gas and invest in tidal and windpower - how ever I think politics again will prevent them from being energy independant - the money will go on social spending until its all gone .......
and thats a great shame
Forbin
PS: I am quite happy for the Scots to be free of England should they wish to be - I just dont believe Alex and the SNP will give them that ( I could be wrong but I've heard what the guy said/says)
As I understand it, it's more England being free of the scots - the support for scotland leaving the union is greater south of the border than north.
As it is, it's a pipedream by the SNP. Rather than do the hard miles needed to create a plan for how they could manage and structure 'independence' they have little more than unrealistic wishful thinking. The closer the potential reality gets, the more that lack of planning means disquiet and a likely 80:20 split to stay within the union (eg Salmond is not astute, he's a buffoon).
Now play peak oil onto that. The scots have been sold the line that oil will make them rich, or at least independent - its the bedrock of the 'thinking'. However, as we know, the North Sea is well into a decline and the main thing that will be left is the make-good costs. Any new prospects are well north, and west; and that brings the Islands question to the fore. For all the scots have a chip on their shoulder about London not taking them seriously; the Orkney and Shetland Islands have a similar beef with Edinburgh. And they have control of very large swathes of the potentially oil bearing seabed.
If you take the belief that Westminster is playing the SNP, then given O&S independence from scotland at the same time scotland is removed from the union would be a coup de grâce - cutting the legs from scotland as its pushed out the door.
And don't forget, it would be a divorce; with all that entails. Also the terms of the leaving would be a negotiation, in which the SNP would not get most of what they think they would.
As I read it, there are three likely scenarios, as seen from Westminster:
Win-Win-Win for the UK
In short, I don't think the vote will go for independence, and if it did, I don't think they would survive it.
It's bread and circuses, a distraction designed to get rid of a bunch of Labour MPs, at best.
First off, I think we are best to remain as a union. There's just too much shared infrastructure etc to work out how to divide it all up fairly.
Moving on to your point, it does seem like a complete pipe dream to me. I honestly don't think it's been thought through at all. First off, Salmond said an independent Scotland would of course be in the EU and join the Euro. It was then publicly pointed out that they would have to apply for both membership of the EU and the Euro if they so wished. He hadn't even researched that "minor detail". Then he said they would remain with GBP as their currency. It was then pointed out to him by Westminster that hardly constituted independence, and anyway that would be entirely up to the UK, which the Scots would no longer have any voice in.
Moving on to the oil, it seems naive to think that nations alone "control" it. It's a world market, and the companies involved transcend a tiny state like a newly independent Scotland would be. In my opinion the oil companies would be telling them what to do, not the other way round.
Having recently seen what happened to Cyprus, I can't believe anyone in Europe could benefit from becoming a smaller fish in a big pond with a notional ideal of independence. None of us our truly independent in the modern world.
So they are going to go for independence, before immediately joining an even bigger organisation. An organisation which has literally impoverished it's own smaller countries and held them to ransom.
Yeah, go for it. Sounds great... bye.....
This depends on the model of independence that is followed. If, following a plebiscite, the Scottish Parliament votes to repeal the 1707 Act of Union, the union of the crowns will remain and the EU could conceivably treat Scotland as part of the UK for EU purposes. Of course, this depends on the Westminster Parliament following suit, but I can't see the population of the rest of the UK tolerating a bunch of politicians deciding they will over-rule a plebiscite.
Now, I have no stake in the outcome of this, being a resident of Australia and an opponent of all forms of nationalism, but I do think that the practical obstacles to Scottish independence are somewhat overdrawn.
1.Scotland votes to stay in the union, SNP withers and dies, otherwise things continue as before.
Well again I will throw our little frontier province out as an example. The secessionist Alaskan Independence Party always had a fair following but Republican party turmoil conspired to get their candidate (a former Republican governor who they more or less drafted) elected as governor and move the Independence Party slightly to the center.
By the end of Independence Party Governor Hickel's term the head of the party's secessionist wing had mysteriously disappeared (later his body was found and a guy is doing 80 years for the murder) and Hickel, refusing to back holding a referendum on secession, had switched back to the Republican party. The Alaskan Independence party pretty much lost all its steam after that but it hasn't quite withered and died. Good chance having the SNP man at the top in Scotland will yield a similar result. A referendum for Alaskan independence would have failed badly during Hickel's term anyway.
Actually I think if there was a UK wide vote without political marketing, there is a case for everyone North of the SE UK region joining together and leaving the city of London.
You did pique my interest in the Scot Independence issue so I rummaged around and found this http://www.guardian.co.uk/politics/scottish-independence-essential-guide.
Any thoughts on the Guardian's guide piece? They didn't mention Orkney and Shetland issue specifically. Do those Islands get to determine their own destiny or would they have to abide by the Scot majority decision?
On an issue you mentioned that hits much closer to home, we just had a major restructuring of oil taxes here in Alaska where proponents of the complete tax rewrite cited the UK's recent taxation shift as the example to be following. It will be interesting to see just how much more revenue the UK oil tax change puts into UK coffers in the short and long term. I don't expect the Alaska change to do anything more than slightly increase the rate at which the state's oil gets extracted while lowering the state's overall take in the short and long haul. Seems to me Norway migtht have a better tack with Statoil and all.
Norway started out with Statoil 100% state owned, Norsk Hydro 51% state owned and Saga Petroleum in the private sector. Saga went bust and got shared between Statoil and Hydro. Statoil became a partly listed company (currently 67% state owned) and acquired the oil production assets of Hydro. A new vehicle called Petoro is now the 100% state owned entity in Norway.
"Ownership" can be managed via the taxation system or via production sharing contracts. One area where Norway has done a good job is keeping the tax system stable.
I am not sure that the North Sea oil factor is currently at the fore in many voters minds at this stage - though I am sure it will be talked up in due course. More prevalent seems to be the general question of wider financial security - and the status quo of the Union (the UK), currently seems to convince the majority of voters as being the safer bet.
Politically, there is uncertainty about an independent Scotland's entry into the EU. It is widely reported in the pro-union press that there is no guarantee that Scotland would be automatically admitted by default upon independence, and instead would have to apply as any other new member does; and even the most disinterested voter can hardly have failed to notice the grief that many EU countries are going through if their finances don't add up!). This in turn opens up questions of currency union (if not admitted to the euro, would Scotland peg its currency to the pound? go it alone? etc.).
On the future production potential for the North Sea I believe that the current tax regime will continue to attract more investment in the region, and in turn we will see a slowing (or even a short lived plateau) of the production decline curve.
I think it is amusing how this Scottish vote really boils down to "Will we benefit more from potential oil wealth being independent or will we be financially better off staying as part of the UK?"
No blue-face guy screaming "Freedom!" just a risk calculation on potential oil wealth.
Euan
Can you please explain the word "plook," as in "even if Westminster clung on to Rockall like a plook on the face of an adolescent sociopath."
Does it mean what we Americans would call a pimple? A zit? Or something else?
Mr Udall,
Plook = Zit
Rockall is even smaller than the Falklands, from memory it is made of Archaean (or maybe Proterozoic) gneiss, sticks out of the Atlantic Ocean way to the west, extending British sovereignty towards upstate NY;-)
I'm not familiar with the Newsnetscotland source, but they do seem to like their colourful similes.
E
My memory is that Rockall was incorporated into the Kingdom of Scotland in 1972, though Ireland has views on that. One of my friends landed on Rockall as part of a UK survey: very steep, but you can climb from one end. Rockall itself has Lower Eocene aegerine granite (I think: haven't checked the paper), but Rockall bank has some Proterozoic basement. World's smallest continent and arguably with the highest human impact per unit area (Greenpeace occupation)
http://petermo.wordpress.com/2007/10/08/rockall-1997-no-new-oil/
Anyway, it would almost certainly be regarded as part of Scotland.
The position of Shetland and Orkney is more interesting, and analogous to that of English-speaking Northern Quebec (Ungava), which was only incorporated into Quebec in 1912 and part of which is likely to get a degree of self-government as Nunavik. The larger Ungava region contains enormous hydro-electric resources. Should Quebec leave Canada, Northern Quebec would have a strong case for independence on the "sauce for the goose is sauce for the gander" principle, and there would then be a tussle for the electricity, with Ottawa (rest of Canada) likely egging on the north.
For Shetland and perhaps Orkney the temptation to demand either full independence or else some sort of sovereignty-association with either Scotland or rest-UK will be very strong. Moreover, there's a strong history of Shetland's unique culture, as much Viking as Scottish.
Consider the Faeroes' Declaration of Independence in 1946, and then home rule in 1948 - the islands now have a very high degree of independence. Iceland is another example - until 1944, part of Denmark, now wholly separate. Shetlanders are impressively honest but it's likely that even Shetland (plus maybe Orkney) would feel the pull of the gold in the seabed and go for it. Should they become independent, then the normal Law of the Sea rules for division of the seabed economic areas would apply.
Alternatively, Shetland/Orkney could choose the status of Jersey - a non-incorporated island. But that, as the post above points out, would risk losing their seabed rights, unless the rest-of-UK exerts its negotiating power very forcibly (unlikely). So I'd suspect this is a low probability.
Most likely, Shetland would go for full independence (and might draw in Orkney, and maybe also the Hebrides and even the very Shetland-like Falklands). As an independent nation, Shetland would have a cast-iron claim to its oil. Thus, if Scotland does vote yes, expect a rapid Shetland move to secession, and the oil to stay with the islands.
More generally, if Scotland leaves the UK, then the whole adventure of Britain is over.
I suspect, even though England-plus would retain 90% of the earlier union's economy, England would quickly withdraw psychologically from the world stage, demilitarise, and become a sort of larger Switzerland, rich, almost certainly outside the European Union (though Scotland would bend everything to stay in the EU). The younger English generation is very different from the 30-60 age folk, who grew up with Europe. My students have very little interest in Europe, except maybe to party in Cyprus, and speak no European languages: but many (or their boyfriends/girlfriends/social mates) speak Asian or African languages. Mumbai or Mombasa are much more home than Milan or Madrid. The Empire is reinventing itself very fast in the young generation of English.
London is one of the world's cultural capitals, and it would prosper, but the US, left friendless as the world's sole policeman, might just weary of the role. Losing a small but crucial bit of the US-UK homeland may thus have very wide consequences indeed. After all, there's an argument that the abandonment of Britain, a small, distant but militarily strong northern bulwark, helped make permanent the fall of western Rome.
I'm biassed of course - my ancestors from Midlothian, Thurso, both sorts of Irish, Dutch, and KhoiSan, were all keen on the benefits of union. But, despite being a veteran of Leith Academy, I doubt I'll get a vote.
You're right, its a peralkaline early Eocene granite.
http://en.wikipedia.org/wiki/Rockall#Geology
Err... Pebble,
Tell us how England is going to stay (become) rich?
(Even leaving out Wales, a lot of it is arguably not very rich at all, and showing no signs of improvement. I remember when unemployment was 250,000 but that was a lo..ong time ago.)
Newsnet Scotland is an Independence supporting site and its sources are normally based from people without an axe to grind but we all can be biased in our actions.
http://newsnetscotland.com/index.php/scottish-economy/7320-scottish-oil-...
I believe that historically oil exploration on the west has been subdued as nuclear weapon carrying subs like prefer freedom without having to navigate around oilrigs let alone islands.
http://www.bbc.co.uk/news/uk-scotland-highlands-islands-11605365
Oil hasn't featured too heavily in the debate although it is implicit in the GDP calculations. However, what I have heard from both sides proves a startling lack of knowledge. So far the unionist side have emphasised the volitility in price of oil and stressed the price might drop which I believe to be nonsense over the long term. On the pro independence side the talk has been of the value of oil remaining being so high with the new prices but completely ignoring the rate of extraction is not going to be constant price increases would have to cancel out the rate of decline to maintain the tax revenue.
A far better option for Sheltlanders would be to vote to return to Norwegian control and live on a generous Norwegian pension.
I once read the major plan for Sweden if they got invaded by Norway. It is a democratic country they just give up and wait for the election and the Norwegians will be in minority.
The Swedes give out the Nobel Prizes. The Swedes gave the Peace Prize to Norway for Norway to give out as a peaceful gesture to their friendly neighbor. I can't imagine any two neighboring countries less likely to go to war with each other.
Norway's path to independence started with a war against Sweden.
The Scandinavian countries tried to stay neutral during the Napoleonic Wars, which they viewed as senseless. They were not given that option.
Russia seized the opportunity to take Finland from the Swedes by conquest, using the simple arguement that "If you're not with us, you're against us".
Sweden followed the "If you can't beat 'em, join 'em logic" declared itself against Napoleon and attacked the Danish kingdom. This allowed them to gain support from Britain, Prussia, and Austria and prevented Sweden from being entirely consumed by the Russians.
Sweden also gained Norway, which was stripped from the Danish kingdom as a war prize. The Swedes saw this as a fair exchange for the loss of Finland. Too bad for Denmark not being fast enough to drop neutrality and sign up with the winners.
Norway for its part had its own emerging government which fought a few battles against the Swedes. The alliance of Russia, Britain, Prussia, and Austria stepped in to make it clear to the Norwegians that they would not be allowed to win.
The whole affair had an upside though. Sweden had a king with ambitions to gain absolute power. Norway presented a problem. Because it joined Sweden in a diplomatically forced union, rather than as a conquest, its much more democratically advanced administration came with the deal.
From wikapedia:
After the accession of Charles John in 1818, he tried to bring the two countries closer together and to strengthen the executive power. These efforts were mostly resisted by the Norwegian Storting. In 1821, the king proposed constitutional amendments that would give him absolute veto, widened authority over his ministers, the right to rule by decree, and extended control over the Storting. A further provocation was his efforts to establish a new hereditary nobility in Norway. He put pressure on the Storting by arranging military manoeuvres close to Christiania while it was in session. All of his propositions were given thorough consideration, and then rejected. They were received just as negatively by the next Storting in 1824, and then shelved, except for the question of an extended veto. That demand was repeatedly put before every Storting during the king's lifetime.
So the plan Karnick read about (Sweden using democracy to win against Norway) probably wouldn't work. It was Norway that led to Sweden becoming a democracy and Norway elected itself out of the Swedish union a century ago.
We are joking about this in Sweden. Declare war on Norway, then surrender and become part of Norway. They then would have to pay our state debts with their oil fund wealth.
Will never happen off course. Despite constant joking around on each others expense, we are very friendly to each other and no one would ever support a war in these democratic nations.
It is not clear to me why Scotland can't just go in with Norway (King & Queen have love-in and summer hols for all the families at Balmoral by informal arrangement. Norway declared a Friend of the Commonwealth!). Norwegian currency could be a good idea, and while they are worth the funding, turn remaining oil opportunities over to Statoil and use Norwegian arrangements with EU and do deals on all the pipelines and proposed HVDC links. I can remember Chris Grieve (Hugh Mac Diarmid) floating the idea at his 80th birthday fest of reviving the old Hanseatic League. Grieve was a founder member of SNP and is reputed to have got thrown out for being communist, and thrown out of CP for being a Nationalist. Old dreams are all the better for being just that.
Norway can't afford a Shetland-reunion, cuz inhabitants of all Norwegian islands with more than 100 souls demand a bridge or sub-sea tunnel to the mainland ... so that they don't need to take the ferry when they decide to move (not even a joke)
That said - Eyeballing the UK-prodchart their production will become a mere trickle around 2020ish - 'what a way to go' as someone said regarding our blindfolded exploitation of crude oil.
United Kingdom Offshore Crude Oil and Lease Condensate Production, January 2000 to December 2012, EIA data
What is the cause of the yearly summer dip? Is that a matter of seasonal declining demand? Has it something to do with yearly maintainance works? In the first case one would assume the summer dip would have shifted to the imported oil from the moment the UK became net importer, so the summer dip in production would have disappeared in 2005. In the latter case one would assume the magnitude of the summer dip would be proportionate to overall production, while the magnitude stays at 0.4Mb/d throughout the decline.
In 2013 the summerdip will be 50% of production.
In August 2018 production falls to zero?
Euan Mearns in Oil Watch - OECD Oil Production (IEA) December 5, 2012, referring to the dip in 2012, wrote, "But the main cause of the free fall has more to do with installations being shut down for repairs such as Buzzard, Schiehallion and Elgin."
Subseaiq: Offshore Field Development Projects: Buzzard indicates that Buzzard shut down for scheduled maintenance in mid September 2012 that lasted longer than the planned 4 weeks. That shutdown removed about 200 kb/d from UK production for about 5 weeks.
U.K. consumption of petroleum products does not show the dips in summer.
Those regular summer dips in U.K. offshore production might very well be caused by maintenance.
According to Professor John Curtice (who studies these issues, link below), what the majority of Scots really want is not independence from the rest of the UK (supported by around 30% of the electorate) but control over all tax raising powers and all spending apart from foreign affairs and defence. But that's not what is on offer. So the likely outcome of the referendum next year (a No vote) is unlikely to resolve the frustration of the Scots.
If it appeared that Scotland would be much better off as an independent country, they would vote "Yes".
http://www.strath.ac.uk/humanities/courses/politics/staff/curticejohnprof/
I think what you will find is that like most people, Scots would like to have control of Taxation as long as the Taxes on individuals are lower and we get to spend more on health, education, etc. If control over taxes meant people thought they were the ones paying more, support soon evaporates. The SNP went into an election with the proposal of a "Penny for Scotland" on income tax (we already have some tax raising powers) and support dropped. This is why Oil as a source of revenue is important, if we get control of oil revenues would that substantially alter the burden on individuals? Based on Alex Kemp s predictions I think the answer is possibly for a few years but then it depends on the decline rate and the price increase to balance the books.
Last month I placed an update of the UK North Sea oil model on the blog:
http://theoilconundrum.blogspot.com/2013/04/the-rise-and-decline-of-uk-c...
This will be part of an environmental modeling web server that I am integrating currently.
The Scottish must be prepared for to ask for the entry in the EU if they left the UK.
Personally I don´t want a independient Scotland belonging to the EU.
Why don't you want an independent Scotland joining the EU? I thought I was an EU citizen already.
As a new sovereign state they would have to apply for membership
It depends on the existing members and it will be a political decision as there is no precedent for this scenario and no clear rule. Spain may well not want to make it easy. I can't see many reasons why the rest of Europe wouldn't want Scotland to be a member especially if they want more control of banking.
In Europe we have already had too many wars and suffering caused by nationalism. The European Union is an attempt to end these wars. Thus the new nationalisms do not fit with the EU project. A project that ultimately means the end of the current nation states.
Dare one mention the Darien Disaster in this thread?
Perhaps one would be better not to.
It depends on whether one reads the victors version of events or the true on as double crossers are not renowned on honesty.
The old saying about North Dakota seceding would make it the worlds #3 nuclear power comes to mind. Minot missile field, GFAFB and the dismantled GF field did make NoDak #3. Nobody mentioning the Clyde Trident base. Scotland individuals for independence are consistently stating that England can take back all the subs and nuclear weapons on Scottish soil.
http://www.guardian.co.uk/uk/2012/oct/25/scottish-independence-could-thr...
If it happens then yes the weapons will move. But realistically it isn't going to happen in a time frame that is going to destabilize the world and certainly not in the two years that Nicola Sturgeon is promising. It's all part of the posturing ahead of any negotiation. As is the whole Shetland issue, posturing ahead of any division of resources. If the vote were held tomorrow then Scotland would remain in the UK, but there's more than a year to go. Ahead of that I'm trying to work out what the impact would be to me and my family especially in regard to energy, the economy, my employment as many of the people I know are. (This doesn't mean people will vote one way or another based of being a couple of hundred pounds better off either way - there's a whole lot more to it than that).
Arguably the power and gas situation is even more interesting.
The Rest of the UK (RUK) will need the renewable energy credits from Scottish wind and hydro to have any chance of meeting its EU renewable energy committments (which in theory are legally binding). Perhaps once Scotland leaves they will be tempted to increase the price of these credits.
That might be unwise however, since RUK has 4 different options in this regard:
- pay the asking price for the Scottish renewables credits
- buy cheaper renewables credits from another surplus EU country (some Scottish renewables are gob-smackingly expensive, especially off-shore wind and wave, so cheaper ones might not be that hard to find)
- partially or wholly default or re-negotiate on its EU renewables targets - perhaps calling Force Majeure due to Scotland's exit
- increase its program of converting old English coal plants to burn wood imported wood pellets
Scotland on the other hand would be very heavily inconvenienced in the event that it was no longer able to spread the subsidies for Scottish renewables across the whole UK, we are talking about billions of dollars of annual income which would suddenly have to be borne by a much smaller population. Scotland's 3 options, in the event that RUK refused to pay for their credits would be:
- continue to pay renewables asset owners the same income they were promised
- default on the payments
- find other buyers for the credits
the first option would be a huge drag on the Scottish economy, the second one would have an immediate impact on investor sentiment towards Scotland, and could conceivably damage its credit rating. The third one might work OK, but is not a terribly likely outcome - the most financially credible buyers - Germany, the Scandinavians (including Finland) and Austria are on course, to meet their own demand or produce a surplus. The Netherlands looks like a possible bet, but they are a small country relative to RUK, and are unlikely to be willing to pay any more than the price of co-firing at their coal plants (far cheaper than off-shore wind).
So Scotland would be in the weaker negotiating position with regards to renewables subsidies.
Away from renewables comes the question of power supply, balancing and grid economics. I don't foresee any likelihood of a de-coupling of the 2 grids, but I do see a likely change to the current single electricity market (BETA) that will go badly against Scotland and Scottish generators. One example is transmission losses. These are currently "smeared" equally across the entire British network, despite the fact that Scottish (and Northern English) generators impose far greater losses than Southern generators. An alliance of Scottish influence in Westminster and Northern English political support has held off a sensible move to zonal transmission losses versus vociferous support for such a move from the regulator OFGEM and big power customers. Once Scottish power is gone from London, what will stop this move, which would cost Scotland dearly? Intermittency through the Scottish "interconnector" (as our transmission links were once known) is also likely to be heavily penalised (when the wind doesn't blow, Scotland may have to pay very heavily for English power (or else build its own expensive back-up gas generation), all of which will lead to problems and costs for Scottish power businesses and consumers.
What about gas? This feels like it should be Scotland's trump card, but even here things are not great. UK gas production may lie heavily in Scottish waters, but infrastructure is weighted towards England with a big chunk of Scotish gas production landing at Teesside. St Fergus is Scotland's only major gas terminal, albeit a very important one, but one whose destiny is to dwindle in relevance compared to the 4 main pipelines terminating in England and the 5 LNG terminals in England and Wales (I scarcely dare mention the possibility of English shale gas).
In the medium to long term Scotland looks to be very heavily dependent on RUK's power and gas markets, and funding for their renewables industry, a position that should be far better managed by retaining its currently out-sized influence in the United Kingdom rather than relying on external good will and trading relationships.