The discovery of North Sea riches in the 1970s planted the seed of modern-day Scottish nationalism as supporters of independence cried “It’s our oil!”
Four decades later, nothing will be more important to the economic future of Scotland than the oil industry should the country vote to end the 307-year union with the rest of the U.K.
Reserves of oil and gas would be split, possibly along the so-called median line, already used to allocate fishing rights. The division would hand the Scots about 96 percent of annual oil production and 47 percent of the gas, according to estimates for 2012 by the University of Aberdeen’s Alex Kemp and Linda Stephen cited by the Scottish government.With a week to go before the Sept. 18 referendum and opinion polls showing the result is too close to call, the question is whether oil production, which has plummeted about 40 percent in four years, could finance a newly created state.
“There’s a lot of talk of massive new developments in the North Sea but the trend in output has been downwards for the last 10 years at least,” David Bell, professor of economics at Stirling University, said in an interview on Sept. 9.
While Scotland’s economy has strengths in tourism, finance and even whiskey, oil will remain vital.With public spending about 1,300 pounds ($2,100) per person higher in Scotland than the U.K. as a whole, “the Scottish government will have to rely on oil revenues from the North Sea to make up the difference,” Bell said.
With public spending about 1,300 pounds ($2,100) per person higher in Scotland than the U.K. as a whole, “the Scottish government will have to rely on oil revenues from the North Sea to make up the difference,” Bell said.
That income is volatile because of oil prices -- with the rate for benchmark Brent crude swinging 17 percent from high to low this year alone -- as well as output that fluctuates depending on investment, exploration, extraction and depletion of reserves.
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