Independence vs. Oil-Dependence: The Scottish Referendum

With so many separate points of uncertainty surrounding the concept of an independent Scotland, it is incredibly difficult to picture what it might look like should the nation vote 'Yes' on 18th September.

The Scottish independence referendum is drawing near, with an accompanying debate that grows more convoluted by the day. Both sides of the argument have long since reached fever pitch, with the 'Yes' team calling foul play over British government's refusal to allow an independent Scotland access to sterling currency and the 'No' team claiming that the SNP will falter when it comes to joining the European Union as a separate state.

Ever the opportunist, Salmond has geared everything up towards encouraging a positive outcome for his campaign, lowering the voting age to just 16 and planning the event for just after the national pride-inducing Commonwealth Games. However, just as the Hollywood adaptation of Braveheart applies a generous helping of artistic license to the facts, it appears that Salmond may have done the same with his estimations of revenue to be gleaned from North Sea fuel resources.

UK government has been rapidly revising down its forecasts for North Sea oil receipts since 2010, and has in fact predicted a drop of almost £8 billion over the next five years from its original calculations. The independently run Office for Budget Responsibility has placed a value of £3.2 billion on North Sea oil revenue for 2016-17, but funnily enough this figure doesn't come close to the one proposed by Scottish government, which more than doubles the OBR's estimate to a forecasted revenue of £7.9 billion in the same year. Calls are now being made for another look at the numbers so that this £4.7 billion gap can be addressed, but with the future of a nation in question, such chasms of opinion surely do nothing to reinforce credibility.

Even if Scottish estimations are proved correct and the independent nation has access to this bounteous source of income, the story doesn't end here. Fossil fuels are no panacea for a nation trying to make its first steps, particularly given the incredible volatility of oil value on the global market. In spite of growing scarcity, fuel price can still suffer from sudden nosedives and without the support of the UK there are doubts as to whether Scotland would be able to weather the inevitable storm that results from these fluctuations.

The other elephant in the room is, of course, that the supplies of oil and gas so interwoven in this debate are running out. The North Sea is a mature site of production that peaked in 1999 and has been in decline ever since; oil production fell 8.8% and gas by 7.2% in 2013 alone and it doesn't take a scientific prodigy to understand that you can't build a sustainable business case on a finite resource. To answer this concern, much has been made of comparing an independent Scotland to Norway, a country that has been unquestionably successful in reinvesting fossil fuel revenues to create a burgeoning and cleaner economy. Unfortunately for the yay-sayers, to hold the two countries up against one another is optimistic at best and delusional at worst.

Norway implemented a long-term investment strategy for the revenues from their oil decades ago, and did so within a completely different and extremely favourable landscape. Wise investment and plentiful supplies saw their sovereign wealth fund grow at an exceptional rate, and it is predicted to be worth £0.6 trillion by 2020. At such a level the fund becomes self-supporting and the nation can reap the benefits of cleaner energy options as their fossil fuel supplies dwindle. Scotland, on the other hand, is joining the party as the last song is playing and the DJ is packing up; there may be enough left in the pot to prop up an independent economy for the next few years but certainly no longer than that. The revenues of UK reserves have already been used to fund schools, hospitals and other public services, and there is simply nothing left to kick-start the sort of prosperity seen in their Norwegian counterpart. If we had been talking about a Scottish break for independence in the mid-1970s, this would be a wholly different conversation. Unfortunately for Salmond et al., we're in 2014 and relying on the dregs of a dirty fuel supply simply isn't the bargaining chip it once was.

With so many separate points of uncertainty surrounding the concept of an independent Scotland, it is incredibly difficult to picture what it might look like should the nation vote 'Yes' on 18th September. From here it looks like great swathes of information regarding how a separate Scottish state would exist are still missing, and until they are explained there can be little hope of anyone making an informed choice when the day comes.

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