Independence and oil: A slippery business

Oil has become the new talking point of the Independence debate Credit: PA

It’s Scotland’s oil.

Ever since the SNP very successfully used that slogan in the 1970s, the riches of the North Sea have been at the heart of the debate over Scotland’s constitutional future.

As the nation prepares for September’s independence referendum, oil and its future are again at the centre of the debate.

Which is why both David Cameron and Alex Salmond have taken their respective cabinets to the North-east of Scotland today.

The Prime Minister first visited an oil rig before bringing his ministers to order for their meeting in Aberdeen.

Some five miles down the road in Portlethin the First Minister gathered his team and then took them all off to do a question and answer session for the public.

Is there anything more to these meetings than photo-opportunities and political point scoring? Well yes.

Both the UK Tory-Liberal Democrat coalition and the SNP Scottish Government want to prove they have more to offer the oil industry – and Scotland as a whole – than the other lot.

Alex Salmond arriving at Portlethen Parish Church near Aberdeen Credit: PA

The argument from David Cameron and his Lib Dem Energy Secretary, Ed Davey, is twofold.

First, the UK has the “broad shoulders” to offer long-term financial incentives to get the remaining and more difficult to extract oil out of the North Sea.

Second, oil is a volatile commodity in terms of its price and therefore potential contribution to an independent Scottish Treasury. The UK is big enough to be able to smooth out the peaks and troughs.

Mr Salmond, a former oil economist with RBS, sees it very differently. Oil will be with Scotland for decades, he says, and with current high prices expected to be sustained, is a reliable source of revenue.

If you are into detail you can visit the Scottish Government's report on maximising revenue from oil.

Second, he would like Scotland to establish an oil fund as Norway did – essentially tucking a bit of oil revenue away every year to save for rainy day.

According to the SNP government’s independence White Paper they plan a short-term “stabilization fund” using oil revenue to help public finances in hard times if there is enough revenue from oil taxation.

Over time they plan to create a long-term savings fund, which would be similar to Norway’s oil fund, which has assets of a staggering $818 billion, according to the Sovereign Wealth Fund institute.

The First Minister attended public discussion after a meeting of the Scottish Cabinet Credit: PA

The SNP’s opponents point out though the White Paper does not put any figures on exactly how much would be put into each fund after independence.

And independent economists such as those at the Centre for Public Policy for Regions are sceptical over whether an oil fund can be afforded.

Or if there were one, they say there might have to be tax increases on spending cuts to allow money to be saved.

If you want more detail of this conclusion it’s here:



Most people, however, will have neither the time nor the inclination to look at academic reports or government papers.

So today’s meetings are also meant to appeal to voters hearts as well as their heads.

The Prime Minister held a meeting of his cabinet at the Shell UK offices in Aberdeen Credit: PA

Although they may not use the slogan now, the SNP is still saying, “It’s Scotland’s oil.”

And, the Nationalists say, just imagine what we could do with it were Scotland independent.

The UK government is saying “It’s the UK’s oil” but Scotland benefits hugely from it too.

And argue that they can best be the custodians of the legacy of black gold off the North-east of Scotland to the benefit of the whole of the UK.

Many people might say that if this is so important – and it is – and Mr Cameron and Mr Salmond have such strong opposing views - would it not be best of they debated this head to head.

Mr Salmond would like nothing better and has repeated his challenge for Mr Cameron to debate independence with him.

The PM is only a few miles up the road, after all, so why not, says the First Minister?

The Prime Minster continues to refuse to do so saying the debates are for Scots to have not for him, as he does not have a vote.

Mr Cameron thinks Mr Salmond would use the fact he is a PM from south of the Border against him.

He may be right. The First Minister was today pointing out he was already an oil economist when the Prime Minister was “fooling around on the playing fields of Eton”.

So a head-to-head clash still looks very, very unlikely though not for want of Mr Salmond trying to provoke the Prime Minister into taking part.

But even if there is no PM v FM debate, oil and its potential to drive an independent Scotland’s economy will remain central to the debate in the run up to September 18.


On a footnote to all this. In case you thought everyone was in favour of exploiting oil the full, the Scottish Greens are not.

You can see more of the Green’s view on their website.