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Scottish oil and gas industry fails to keep up with economic growth

24/07/2015 by

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Whilst there have been many positive results for Scotland’s economy since the beginning of the year, with job growth and wages on the up, it seems that the oil and gas industry has fallen short. In its recently-published Quarterly Economic Indicator the Scottish Chambers of Commerce (SCC) said the three months to 30th June saw many business trends at their most positive levels for some time; however, the slump in price for crude oil meant that outlooks for companies in this area are below those of other industries.

In the new report the SCC said 2014’s buoyant year for the construction industry seemed to be continuing into 2015; meanwhile, manufacturing looks to be having a positive second quarter, “with strong trends in both sales and orders”. Tourism and retail businesses are also reporting positive trends, with the report suggesting that both sectors are “looking forward to a successful summer, with the tourism sector in particular looking forward to another very positive summer.”

It seems not all industries have faired well, however, with the SCC saying the outlook and performance for gas and oil firms was below levels noted by other service sector companies. Liz Cameron, the SCC’s chief executive, said it was clear that poor oil prices have had a marked impact on the nation’s gas and oil sector, not only in the north-east but also across the entire nation.

Talking about the latest report, Ms Cameron stated: “Our indicator for the second quarter of 2015 points to a Scottish economy where most business trends are positive and which is establishing a pattern of reliable growth, even if it is slower than we would like. The main exception to this overall pattern is within the oil and gas service sector.”

The low price for oil is a continued and significant concern for many in the oil and gas service sector. Whilst expectations for the next three months' employment levels, sales revenues and investment expenditure remained positive overall for those in the energy industry, they have fallen to the lowest dip since 2014’s first quarter. The report explained: “The average price of Brent crude oil per barrel has remained at low levels throughout 2015 so far. Long-term low oil prices represent a challenge not only for the oil and gas sector and the north-east of Scotland but for every business in Scotland that makes up the supply chain.”

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