Oil forecasts ‘out by £15.5bn’


Published: Monday 29th December 2014 by The News Editor

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The Scottish Government’s oil revenue forecast for the first three years of independence is now out by £15.5 billion, according to the Scottish Secretary.

Alistair Carmichael said the latest UK Government analysis showed that 100 days after the referendum, an independent Scotland would have been facing the shortfall following a drop in oil prices.

He said “serious questions” now needed to be asked about how the SNP administration “got this so badly wrong”.

UK Government figures claim that the current falling price of oil would have provided £4.7 billion for an independent Scotland between 2016/17 and 2018/19.

This is in contrast to Scottish Government predictions of £20.2 billion being generated over the same period.

Mr Carmichael said: ” On referendum day, Nicola Sturgeon and John Swinney were predicting ‘a second oil boom’.

“Scottish Government economists were telling us the oil price would be 110 US dollars (£70) per barrel.

“Now, just 100 days later, with the oil price actually standing at 60 US dollars (£38), there is a £15.5 billion hole in the finances of independence.

“That is a £155 million mistake for every day that has passed since the referendum on September 18.

“Serious questions need to be asked about how they could have got this so badly wrong on this vital referendum issue.

“We were making a decision that Scots were going to have to live with forever and the Scottish Government are sticking to wildly optimistic oil predictions that have not even made it to the new year.”

Mr Carmichael said it was ” totally unacceptable” and said the Scottish Government needs to take steps to “restore confidence” in any future oil analysis.

He said: “At the same time, we are continuing to work closely with industry leaders to address the challenges it faces and to maintain Britain’s energy security by maximising the economic recovery of our domestic oil and gas resources.

“The package of allowances and tax reliefs the UK Government unveiled as part of the Autumn Statement were the result of the close and productive working relationship with the oil and gas sector in this country – a level of support which is only possible because we can draw on the combined strength and resources of the United Kingdom.”

A spokesman for Deputy First Minister John Swinney said: “This is staggering hypocrisy from Alistair Carmichael, whose own UK Government’s Energy Department was last year forecasting oil prices to reach 134 US dollars a barrel in 2018 – substantially more than the Scottish Government’s March 2013 price projection of 113 US dollars per barrel, which was in line with many independent, international forecasts

“Instead of, bizarrely, gloating over his own Government’s lower than expected revenues, Mr Carmichael should be doing all he should to help the industry, which has too often been subject to wildly fluctuating taxation from successive Westminster governments.

“Oil is a bonus, not the basis of Scotland’s economy, and will be a fantastic asset for Scotland for decades to come, with as much in value still to come as has already be extracted. And most independent forecasts expect the price to rise again next year, with Opec predicting a price of 110 US dollars per barrel for the rest of the decade and around 100 US dollars in real terms in the long run.

“Current prices are nothing new – in 1999 they were around 10 US dollars a barrel, and Norway had only just started to invest in its oil fund, which is now worth more than £500 billion and is the biggest sovereign wealth fund in the world.”

Published: Monday 29th December 2014 by The News Editor

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