As always, difficult to tell and depends on how things turn out. Overall, I think it's marginally good news unless you think the most likely alternative scenario is that oil hits $200 a barrel.
There are a couple of factors to consider.
How do my theories interact with what the Scottish economy currently does?
How do my theories affect the Scottish government's fiscal position?
How do my theories affect the general economic performance of Scotland?
What is it like to live in Scotland if I'm right?
Depressed oil prices don't help an independent Scotland's oil tax revenues. But given that the North Sea doesn't have huge reserves of super-profitable oil left even with oil at $100 a barrel you probably have to build a fiscal case without much in the way of super-taxes regardless of the oil price (unless you are mulling over oil at above $200.)
One of the most important economic components of oil in the Scottish economy are the jobs. Mostly in Aberdeen, mostly very well paid. It's clear that the severe reduction in oil price has hurt employment and wages in Aberdeen and that this is affecting the broader Scottish economy. Having a bunch of formerly well paid oil workers on the dole, not paying taxes is not good news for either the Scotitsh economy or the Scottish government's fiscal position.
Looking further ahead what I think Aberdeen is good at is extracting difficult-to-get-at oil and doing so for a reducing cost. So, assuming that the oil price doesn't fall much further for much longer and there remains a global offshore oil industry then Aberdeen has a market to sell to. This market may be larger in the future than it has been in the past. I mean that there might be more offshore work to do around the world than has already been done in the North Sea and the Gulf of Mexico. If extracting offshore oil is currently profitable at, say $45, and the oil price is $40 that means there is money to be made researching how to cut the cost of extracting oil and a premium to be paid for technology and services that whilst expensive per unit significantly reduce the overall cost of oil production. There are some signs that the Scottish off-shore industry is begining to head in that direction. With oil at $50, $60, $70 a barrel then there is a clear demand for Aberdeen's goods and services but probably not a bonanza.
Alternatively the cost of solar PV and wind fall much faster than I expect, batteries become super-cheap and everyone buys electric cars and there is no oil industry anywhere. This is not good for Aberdeen's oil industry.
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timeasmymeasure
no subject
Date: 2016-08-01 03:56 pm (UTC)There are a couple of factors to consider.
How do my theories interact with what the Scottish economy currently does?
How do my theories affect the Scottish government's fiscal position?
How do my theories affect the general economic performance of Scotland?
What is it like to live in Scotland if I'm right?
Depressed oil prices don't help an independent Scotland's oil tax revenues. But given that the North Sea doesn't have huge reserves of super-profitable oil left even with oil at $100 a barrel you probably have to build a fiscal case without much in the way of super-taxes regardless of the oil price (unless you are mulling over oil at above $200.)
One of the most important economic components of oil in the Scottish economy are the jobs. Mostly in Aberdeen, mostly very well paid. It's clear that the severe reduction in oil price has hurt employment and wages in Aberdeen and that this is affecting the broader Scottish economy. Having a bunch of formerly well paid oil workers on the dole, not paying taxes is not good news for either the Scotitsh economy or the Scottish government's fiscal position.
Looking further ahead what I think Aberdeen is good at is extracting difficult-to-get-at oil and doing so for a reducing cost. So, assuming that the oil price doesn't fall much further for much longer and there remains a global offshore oil industry then Aberdeen has a market to sell to. This market may be larger in the future than it has been in the past. I mean that there might be more offshore work to do around the world than has already been done in the North Sea and the Gulf of Mexico. If extracting offshore oil is currently profitable at, say $45, and the oil price is $40 that means there is money to be made researching how to cut the cost of extracting oil and a premium to be paid for technology and services that whilst expensive per unit significantly reduce the overall cost of oil production. There are some signs that the Scottish off-shore industry is begining to head in that direction. With oil at $50, $60, $70 a barrel then there is a clear demand for Aberdeen's goods and services but probably not a bonanza.
Alternatively the cost of solar PV and wind fall much faster than I expect, batteries become super-cheap and everyone buys electric cars and there is no oil industry anywhere. This is not good for Aberdeen's oil industry.