Oil, Scotland and the Fuel of Inequality

  There’s an old adage about building castles on sand. When Margaret Thatcher started declaring that the sun had set on the coal mining industry, the resulting decades showed just how merciless idioms can be. Across the UK, the lifeblood of many northern towns had poured from those mines. So when the blanket was pulled from underneath, they began to sink. Today their ruinous forms remain, living ghosts of what once was: a people bound to a single industry.

  And now we have Scotland. Over the last two years the Scottish people have watched as its once-favoured child, the one that would carry the nation’s hopes, dreams and ambitions into a golden future, diminished. We’re talking, of course, of North Sea oil. It is unfortunate that so much of the 2014 pro-independence rhetoric underscored Scotland’s dependency on offshore oil profits, ballooned by out-of-the-world estimations for future fiscal returns. It is unfortunate and at least a touch ironic, because soon after the SNP were forced to admit their figures had been wildly off the mark. Last year the First Minister revised the campaign’s figures for oil revenue in the 2016/17 year. And this was no small revision: the pro-independence’s £7.9 billion became a lowly £600 million, at a whopping decrease of 90%. [1]

  Whilst the castle was never built, the sand had already been targeted for construction. Whether Scotland would have survived as an independent nation with the 70% drop in oil prices over the last 18 months, [2] we could not say. However, what we can say for sure is that the country would not have become the shining beacon of wealth once prophesised by Alex Salmond. Neither would it have had to become friends with Greece in Europe’s losers club, as others would have us believe, but it would have struggled as a wounded animal, lamenting the laceration at its side.

  But at the time of the referendum, such stories were not being told. There weren’t stories of woe or over dependence, of coveting the gold mine of oil to the detriment of the country, and an economic future built oh-so precariously on a single platform. It was a simple story of hope and prosperity, and many wanted to believe in it. At its worst, the independence conversation and resulting aftermath distracted the Scottish people from the country’s real problems.

  Scotland possesses both wealth and the idea of wealth, but the former still belongs only to a select few. The latter is shared by all, but only as a distant star pleases indiscriminately, and ideas are dangerous when they fail to ever find solid ground. To those that suffer, to the poorest in the North, the notion of Scotland’s North Sea oil wealth will be little more than a phantom of a possible future, swiftly falling beyond anybody’s grasp, independence supporter or no.

  In the second half of 2015 Scotland’s economy grew by 0.1% versus England’s 0.7%. The predictions for this year aren’t any more hopeful, either. With low wages across the board, it’s a frightening reality when so much of the country’s future was based on a single finite resource, that is as susceptible to the winds of global economics and supply and demand as a piece of paper to a tornado.

  What is required is a cultural change. A recent push for large asset rich corporations to share their wealth with asset poor companies is a stepping stone in the right direction: a future in which economic unknowns no longer place a lid on risk tasking. Scotland needs to be able to trust itself again, and not be bound by the wait-and-see of possible outcomes that may never come to pass (independence, oil returns, etc.). In the here and now, the future is secured by companies working together and supporting new waves of entrepreneurship and growth.


[1] http://www.telegraph.co.uk/news/politics/SNP/11483905/Nicola-Sturgeon-admits-independence-oil-figures-were-wrong.html
[2] http://www.bbc.co.uk/news/business-35340893