The Black Black Oil

ornoirOil is a geological event, democracy is a system of governance. One is not dependent on the other, though they are not mutually exclusive. Oil is a fossil fuel, a hugely powerful but finite resource. Oil is an energy source we should be making a rapid transition away from, Democracy is a system we are trying desperately to move towards.

This is just a quick fact-check after the orgy of self-satisfaction, barely subsiding today, from media, commentators and politicians alike after GERS figures revealed that North Sea revenue fell from more than £10.9 billion in 2011-12 to less than £4.8 billion in 2013-14, before dropping to £2.25 billion last year. This is bad news for anyone predicating a case for independence wholly on oil revenue. For others, it’s not so bad. No doubt we will have a few more fervid weeks as the unionist press gleefully wallow in the economic insecurities of Scotland in the Union, and then project that wholesale into an imagine future under independence.

IMG_3275As Robin McAlpine has written: “The problem is not that we are ‘cursed’ with a valuable asset buried deep under our sea territory (as some unionists seemed to believe during the referendum). It’s that, like financial services before it, the case for independence simply relied on it too heavily as a one-stop-shop for economic wellbeing.”

This ‘crisis’ is an opportunity to make and re-make the economic case for independence because our case for living in a democracy isn’t based on a viscous substance under the sea but on principles of self-determination. McAlpine continues: “Like Ireland with housing and Iceland with banking (though massively more financially sustainable than either), we had a strand in the economy which kept delivering tax revenue so we came to rely on it too much. It becomes something like a fairy tale we tell ourselves at night to make ourselves feel safe.”

“Which is why the constraint of falling oil prices can be seen as a positive – it might force us to start telling ourselves a better story. Which in turn is good, because there’s a much better story to be told. Because while the oil industry has been good for tax revenues, it has other weaknesses for Scotland. It does not create all that much employment across the country since many of its workers come from outside Scotland and many of its supply chains are not based in Scotland either.”

IMG_3268That problem of hosting or being reliant on industries that create prosperity for a stream of people from outside Scotland may sound familiar to many, but the real issue here is about the fairy tale of oil and the reality of climate change. Nicola Sturgeon was quite right to reply to her critics at FMQs:

“It is a rather strange argument, I think, for any self-respecting politician to argue that we should stick with the system that created the deficit instead of taking more powers into our hands to do something about it.”

But the real issue is how we as a society move wholesale (and rapidly) to a low-carbon future. That’s the task facing us all and it is likely to redefine how we imagine a Scottish democracy in just the way that oil dominated the thinking for Scottish nationalists in the 1970s and 1980s.

You Don’t Need to be a Weatherman to Know which Way the Wind Blows

As the European renewable sector reports employing over one million people and creating a turnover of around €143.6 billion in 2015, and Amber Rudd takes a hatchet to the industry in Scotland, energy has become an issue that is central to the constitutional question.

Responding at the time to Rudd’s announcement, Neill Stuart CEO of Scottish Renewables stated: ‘“With the promise of future support for gas, nuclear and offshore wind, it is totally unclear if there is any future for investment in onshore wind and solar, despite the fact that these are the cheapest forms of renewable power available.  Both have the potential to make a significant contribution to future climate change targets while keeping bills down for consumers, but we will only secure deployment if they too can bid in for the long-term contracts for clean power available to other technologies.”

nuclear-osborne-parliament-projection-640pxWith George Osborne still (incredibly) toying with the idea of actually proceeding with Hinkley Point (at £24.5 billion… the single most expensive object on earth), our dipping oil revenue is an irrelevance. 

The consequences of our declining industry needs to be put in the context of the alternative – a future-facing diverse and sustainable economic base built on life-affirming, job creating, low-carbon projects. It also needs to be put in the context of the British economy, its values and institutions and the risk they present for us. As Greenpeace stated recently, in terms of Britain’s disastrous addiction to nuclear power this could be seismic:

“With all the delays and setbacks, some are starting to wonder if Hinkley could get canned completely. If it doesn’t go to plan, who will pick up the cost? The answer — taxpayers will. The funding mechanism the government put in place means that if Hinkley is abandoned, or doesn’t work when completed, UK citizens could be required to shell out a stonking £17 billion to French and Chinese backers to cover their costs.”

That oil was a squandered resource used to prop up decades of government we didn’t elect, doesn’t make it any easier.

Murdo and the Tank Commander 

As the bold Murdo Fraser announced that “Independence was dead” and Ruth Davidson declared that the SNP had “been found out” on the BBC’s Question Time programme, questions have to be asked of these individuals. Fraser is himself a subset of political failure, having failed to get a hold of the (failed) political sect of the Scottish Conservative Party. As for being “found out”, I’m not sure what metric for success Davidson is using as the Tories slump to 13% in the polls against the SNP’s 60%. If the SNP are “found out” what are the Tories?

The unionist politicians are experts in managing decline, and glorying in failure. But what’s really apparent from the last few days is their inability to construct an alternative vision. That doggedly elusive Positive Case for the Union is mirrored here. If oil revenue is failing what is their strategy for economic recovery? Answer: a low-wage economy with a punitive welfare system, ‘Britannia Unchained’ (sic). If Europe is failing what is their strategy for an alternative foreign policy? Answer: retreat to the comfort zone of protectionism and xenophobia. If energy policy is a problem what is their answer? Go nuclear, do fracking. Cumulatively it’s a retreat to the 1950s for a polity unable to face the future. Again and again being part of Britain means we will be hurtling backwards.

Energy is they key to a sustainable future. Energy is the key to a Scottish democracy.

It should be renewable and publicly owned. It should be low-carbon and multi-scaled: state, municipal and community controlled where appropriate.

As McAlpine writes:  “So if we are in a tight global economy and public revenue is so important, why are some so utterly committed to making sure that foreign-owned corporations continue to possess our entire energy system? A publicly owned national grid would fill a billion-pound-sized hole in our revenues. And it’s not the only more radical restructuring of the country that could be considered. There is no reason we need to limp into independence looking like ‘little Britain’, dragging its failures behind us like chains.”

When Better Together politicians stop crowing we will hear from them is only silence.

Oil is a geological event, democracy is a system of governance.

 

Tags:

Comments (40)

Join the Discussion

Your email address will not be published. Required fields are marked *

  1. Robert Graham says:

    oil is not a fossil fuel – it is Abiotic and not the product of long decayed biological matter and is replenished from sources within the mantle of the planet , and the peak oil myth was introduced to stem the fall in the price of oil by a shell oil geologist among others in the oil industry as far back as 1956 whose prediction was that we would start to run out of recoverable supplies by 1970 it never happened ,we are not running out of oil , so can we get off this fossil fuel myth once and for all .

    1. Pogliaghi says:

      The abiotic oil theory is pretty fringe.

      1. J Galt says:

        Not If you go to University In RussIa In which case Its the sIlly notion that It’s squished DInosaurs that’s laughed at!

  2. Richard Pach says:

    Good thought provoking article free form the usual emotional rants that characterised indyref and a riposte to the doomsayers that proclaim that without oil Scotland is incapable of earning it’s keep in the world. More articles like this please!

  3. Robert Graham says:

    well it seems the Letter “I” has been removed for some strange reason by your website

      1. Matt Seattle says:

        keep calm and use upper case I
        you know It makes sense

      2. J Galt says:

        M”EYE”5?

    1. Saor Alba says:

      Never blame others.

  4. Ian Kirkwood says:

    The true wealth of each country Is Its citizens and the Immense value they generate collectIvely.
    The wealth we create togethere accrues each day Into the surplus known as ‘economic rent’ whIch Is invested In the value of unImproved land. It Is the amount a sIte generates above an enterprIse’s return of wages and due profIts. In other words the amount you could rent the sIte out for. It could be a large or small sum depending on the socIally provided Infrastructure, amenItIes and servIces each locatIon enjoys. If you think about that you may see how much more progressIve Its collection would be than are today’s harmful taxes which unfaIrly benefIt London and the South-east.
    ThIs value Is much greater than the oIl rents ever were. Here Is the hIddden revenue stream that has been prIvatIsed as free capItal gaIns for owners of land. We need to collect It now and get rId of damaging taxes. Professor Roger SandIlands (SLRG) has shown that by collecting AGR our £15 bIllIon defIcIt can be transformed ImmedIately Into a £15 billion surplus. WITH NO RELIANCE ON OIL RENTS.
    Annual Ground Rent please.

  5. Jean-Loup says:

    I’m confused, am I the only one who read the whole White Paper? Because I distinctly remember that all the figures presented to make the case for an economic successful independent Scotland didn’t include any revenues from the oil and gas industry.

    In fact it’s stated several times that this is “the cherry on top”.

    This is also used to justify the creation of the oil fund inspired by the one Norway has.

    Now everyone and their mum screams that independence wouldn’t have worked in the current oil crisis conditions. I’m not saying they’re wrong but a case without oil had clearly been laid out.

    (cue unionists telling me how the SNP lied to us in 3, 2 …)

    1. Anton says:

      “Am I the only one who read the whole White Paper? Because I distinctly remember that all the figures presented to make the case for an economic successful independent Scotland didn’t include any revenues from the oil and gas industry.”

      Er, yes they did. The White Paper is absolutely clear about when its figures include oil revenues and when they don’t.

      “In fact it’s stated several times that this is “the cherry on top”.”

      No it’s not.

  6. Clive Scott says:

    Good post. It is bonkers that The Tories are going hell for leather to have a major part of the power generating capacity owned, controlled and run by a partnership of two foreign powers, the French and Chinese. How long would Putin last in power if he signed a deal for a UK/US partnership to own, control and run a significant percentage of the generating capacity of Russia? It is beyond absurd the way the UK is mismanaged by the red and blue Tories. SNP x 2 in May as a stepping stone to independence.

  7. Noel Darlow says:

    The attempt to define Scotland’s future economy by the balance sheet on day 1 of independence is just dumb – a failure to see the wood for the trees. Independence is a long-term decision which will affect generations to come. It’s not an ordinary general election where we vote for a government with a five-year economic plan and yet it often seems to be discussed with the same kind of narrow, short-term focus.

    Long-term success is pretty simple to define: it depends only on our ability to make smart decisions and smart investments for the future according to Scotland’s best interests. Whether we are a little better or a little worse off on day 1 of independence is largely irrelevant. No-one will remember in 20 years time – but they will reap the rewards, or suffer the failures, of the economic decisions we make today.

    For example, probably the most important investment decision of our generation is to build a new kind of grid (as discussed in a recent Bella article https://bellacaledonia.org.uk/2016/01/28/smart-grid-super-grid/). We can’t make the switch to renewables without it and so this will be crucial to Scotland’s ability to fulfil it’s huge renewables potential. This could be a highly successful industry of the future.

    Instead we are ruled by a conservative party riddled with climate denial, determined to waste vital funds on nuclear white elephants (Trident as well as Hinkley) and positively salivating at the prospect of making a quick buck from fracking.

    I’m genuinely more worried about our prospects within a UK which seems to have no vision for the future and has started to cannibalise itself in order to keep up the pretence of a successful economy. Increasing inequality creates a lot of deep-rooted problems: crime, drug abuse, educational outcomes – you name it. Just about everything which can be measured gets worse with higher levels of inequality. As always, the UK seems to be heading in entirely the wrong direction.

    We can do better. If we could create a more equal society, we’d have more money circulating in the economy. Over time we’d have fewer expensive social problems to deal with. Together this could create a substantial “equality dividend” for an independent Scotland.

    That’s the kind of thing we should be talking about rather than obsessing over the short-terms variability of commodity prices.

    1. Noel Darlow says:

      That was weird.. Bella ate my “I”s! I’d try to fix it but there is no edit button.

  8. willie says:

    Democracy is indeed a system of governance but so is the illusion of democracy. And we in the UK are certainly living in one big illusion because we did after all decide, albeit by a small majority, that we were better together. And as we approach the impending Hoyrood election, the media once again goes into overdrive to smear and fear us with hoary tales of SNP baad. In fact, our very own homegrown left in the shape of Rise, Respect, Solidarity, the SSP tries to tell us that too – or at least some of their members do as the clamour to secure a paid sinecure. So yes, we do live in a land where the D in democracy is slight and the I in illusion is large. Rome was not built in a day, and neither were Thatcher’s transitions to where we are today achieved overnight. Unravelling the mess will not be achieved overnight. But we have moved on, and I believe the SNP have delivered much in very difficult circumstances. We must therefore this May give them the tools to steer us to the sovereign country we need to be to have any chance of delivering what we want. Rome indeed was not built in a day.

  9. willie says:

    What is wrong with the typing that it’s coming out all corrupted. Has Bella been hacked

  10. Iain says:

    Or we could still exploit the North Sea with CO2 captured from power stations and industry enabling CO2 EOR and the North Sea established as a CO2 storage hub for Europe in the next few decades! Plus their are lots of SMEs in Scotland benefiting from Oil and gas!

  11. Peter Clive says:

    Everything comes down to energy:

    http://moflomojo.blogspot.com/2015/12/towards-kardashev-type-i-civilisation.html

    Meanwhile the unionist celebration of failure in relation to oil is utterly perverse:

    http://moflomojo.blogspot.com/2016/03/the-feeders.html

  12. Broadbield says:

    Two really InvIgoratIng artIcles from Bella and Commonspace past two days, makIng 2 good poInts: the future’s renewables and the YoonIes have no posItIve message. Don’t they get It that runnIng Scotland down makes Indy ever nearer?

  13. Pogliaghi says:

    Oh dear. How unfortunate that the letter ‘i’s “indisposition” means I’ve lost patience to read the comments and see if anyone else has provided critique of some of the mistakes ‘above-the-line’.

    This article started off well with a nice rousing cri de coeur about seizing as an opportunity the North Sea’s economic crisis to remodel the economic case for indy. Then it got even better by framing the argument in principled terms of climate change rather than stodgy economics.

    Unsurprisingly (given the author) though, it suddenly and arbitrarily slalom’d off to do a bit of right-on box ticking. Anti-nuclear rhetoric, renewables hype and Greenpeace namecheck? Check.

    Renewables simply are not, and do not have the profitability, in terms of their fundamental energy-returned-on-energy-invested (EROEI) numbers to be an economic replacement for fossil fuels. They simply do not pack enough of an energetic punch for the labour invested. The absolutely pervasive belief to the contrary, is a pernicious – and, if you actually investigate the scientific and engineering literature on low carbon energy – which *no environmentalist ever does* lest it pollute their PC mindset – quite transparently daft misconception.

    In fact, renewables will struggle to fully decarbonize even current UK electricity demand economically and physically, let alone becoming a net source of tax revenue or decarbonize the other sectors – transport, heating etc. Which is, of course, what all principled environmentalists ought to be thinking about – not only long term, but short term, and globally – say in 20 years – if we’re to avoid catastrophic climate change.

    Nuclear plants like Hinkley C are obviously not the best the technology has to offer, but they can at least get the job done. It’s not only the world’s most expensive object but by far the world’s most expensive nuclear plant by rated capacity.

    What venal NGOs like Greenpeace never admit is that about HALF the cost of Hinkley C is simply due to its bad financing. Financing which effectively allows two two quasi-public sector companies (CGN and EDF) to make eye-watering private sector profits.

    The solution to new nuclear in the UK is boneheadedly simple: fund it through state borrowing, not shitty crony-state-capitalist PFI, which is largely a backhander to Chinese apparatchiks to encourage investment in the all-important “City”. Even more savings would be possible if the better-value AP1000 reactor, to be licensed within the year by the ONR, was chosen instead.

    Globally, state financed nuclear is already cheaper than coal according to the IEA. This *simply cannot be said* for any current renewable. The folly of private-sector nuclear is a legacy of the Major government’s sell off British Nuclear Fuels, but interestingly (as a recent Telegraph article pointed out) Thatcher actually wanted, in the 80s, the UK state to build new tranche of new nuclear stations, of which only Sizewell B came to fruition. The Thatcherites believed in nuclear, but they also knew it was a terrible fit for their neoliberalism; because nuclear plants, like roads, hospitals, railways and schools, etc. etc. etc. are the kind of real social infrastructure only the state, and not the market, can deliver.

    The Left has never understood the essential and synergistic role of the state and nuclear energy in the low carbon transition. Instead they’ve been blinkered by radiophobia and silly, sentimentalist, Schumacherian small-is-beautiful ideology (which ironically, culminated in 80 meter wind turbines carpeting the Highlands, and various puerile rationalizations for this like “those hills were never natural anyway” etc. etc. ad nauseam – but I digress!)

    1. Noel Darlow says:

      In fact onshore wind is already cheaper than nuclear – and coal & gas.

      Nuclear power stations also have a problem fitting in to the kind of renewables-dominated grid we need to build where dispatchable backup, import/export and demand management will be used to decouple energy production from energy consumption. The idea of baseload becomes redundant in that kind of setup.

    2. Climate change and economics, energy policy and economics aren’t mutually exclusive issues, are they?

      The questions about Hinkley arent an exercise in ‘tick-box’ journalism, they are entirely reasonable questions about the vast sums of money involved, which you fail to address?

  14. Steven Milne says:

    The phrase “our dipping oil revenue is an irrelevance” perfectly encapsulates the economic illiteracy of those who espouse the cause of Scottish independence.

    1. Have you actually read the article?

      1. Steven Milne says:

        I have read the article and I find it incomprehensible how in 2016 you can be proposing left wing economic policies which have failed every time they have been attempted: USSR, Greece, Venezuela, North Korea, Zimbabwe etc.

        By any objective measure free market capitalism has produced better outcomes than state planned socialism in terms of economic growth, choice of goods and services and individual liberties.

    2. Inverschnecky says:

      Sorry Steven – the reverse 1s true. The econom1cs of your nat1onal1sm 1s based on 1.7 tr1ll1on of debt and on the c1ty of london jam packed w1th o1l compan1es, m1n1ng compan1es and banks.

      The cyn1cal m1ght suggest that the so called “war on terror” ma1n goal 1s to ma1nta1n and extend the asset base of the above c1ty 1nterests and those 1n wall street.

      Any superf1c1al analys1s of GERS 1nd1cates that 1t rema1ns what 1t was setup to be, by one 1a1n Lang – 1n h1s memo to John Major:

      “The booklet 1 have had prepared and pr1nted, sett1ng out the deta1ls of the Government’s expend1ture and revenue 1n Scotland, 1 judge that 1t 1s just what 1s needed at present 1n our campa1gn to ma1nta1n our 1n1t1at1ve and underm1ne the other part1es.”

      Alternat1ve analys1s of the scott1sh economy, are ava1lable onl1ne – and on th1s s1te – they prov1de compell1ng ev1dence that 1t 1s setup to benef1t 1nd1v1duals l1ke the duke of buccleuch and lord astor.

      Sav1ngs are ava1lable to an 1Scotland – they can stop 1nvest1ng 1n 1nfrastructure projects 1n London, nuclear weapons, and an a1rforce to bomb Yemen/Syr1a/1raq and start tax1ng land for 1t’s average value.

      S1nce the c1ty cannot and w1ll not reform – const1tut1onal change – such as scott1sh 1ndependence, becomes a log1cal conclus1on.

      1. Steven Milne says:

        How would you propose to create wealth ? (as opposed to red1str1but1ng wealth)

        How would “tax1ng land for 1t’s average value” work 1n pract1ce?

        The average person benef1ts from the work1ngs of the C1ty. The value of everyone’s pens1on depends on share pr1ces r1s1ng and the economy would stagnate if banks d1d not lend to businesses thereby allowing them to create jobs and new products and serv1ces.

        1. bringiton says:

          Wealth Is neIther created nor destroyed,It Is sImply moved around from one place to another.
          What we have seen over the last 3 decades or so Is the concentratIon of resources in the hands of a mInorIty at the expense of the many.
          ThIs has been brought about,not by entrepreneurship but by government polIcIes engIneered to achIeve that outcome.
          PolItIcians are begInnIng to realIse that you cannot have a successful socIety by relyIng solely on trIckle down voodoo economics and that the wealthy elIte cannot survIve in Isolation behind closed gates.
          We need to empower everyone In our socIety If we are to prosper In the long term.
          That Is,of course,only if you belIeve there is such a thIng as socIety.
          This missing i is a pain.
          My kIngdom for an i.

          1. Steven Milne says:

            “Wealth 1s ne1ther created nor destroyed, It 1s s1mply moved around from one place to another.”

            Th1s erroneous statement represents the fundamental flaw 1n soc1al1sm.

            Wealth 1s created by f1rms prov1d1ng goods and serv1ces 1n the marketplace at a pr1ce customers are w1ll1ng to pay.

            Government red1str1butes wealth from the r1ch to the poor v1a tax and welfare pol1c1es, eg in UK the top 1% of tax payers pay 30% of all 1ncome tax.

        2. Ian Kirkwood says:

          Steven, thIs Is how It would work: End the 100% (at least) deadweIght losses of taxatIon by replacIng them with AGR/LVT. ThIs charge (5% a year of the value of each sIte, mInus improvements such as buIldIngs) Is Immune to deadweIght losses. ‘ATCOR’ means all taxes come out of rent. Not only does thIs mean that the rent fund Is bIgger than all current taxes, but also that each £1 collected will now be worth Its full £1 face value Instead of net zero. From here you can measure Scotland’s new prosperIty.

          1. Steven Milne says:

            The Latter Curve demonstrates that punitive rates of taxation actually reduces the total tax collected. In the scenario you describe, the firms and individuals who would be asked to pay substantially more tax than at present would doubtless take some action to avoid this which would negatively impact investment and employment.

  15. MBC says:

    Interesting article but there’s really no point in posting unreadable comments.

    1. Anton says:

      Wht do yu men, unreadobble cmmts?

  16. Chris Danes says:

    Superb article, and the guy from Commonspace is spot on as always. Ive donated, keep it up folks!

  17. john young says:

    And capitalism has worked Steve Milne?are you on something? the grand old US of A home of capitalism has taken over the mantle once worn by Great Britain of raping/pillaging/destroying whole countries and their peoples in the name of democracy/capitalism.The utilities should be owned by the people and used to set tariffs that help small businesses grow/develop and are sustainable.

    1. Steven Milne says:

      1 think that capitalism has worked much better than any of the various brands of socialist alternatives such as USSR, nazi Germany or Greece, Z1mbabwe, Venezuela and North Korea 1n the modern world.

  18. James y Dow OZ calling says:

    WhIlst combating ScottIsh Independence England was workIng on an Independence plan of her own. Energy Independence a nuclear energy Independence. HInkley PoInt Somerset representIng the fIrst of twelve nuclear reactor sItes wIth an eventual 50 In total to delIver energy Independence to England by 2050.
    On the matter of world energy supplies I fInd It amusIng watchIng that old EtonIan word WarrIor DavId Cameron and hIs cronIes dancing around the RussIan bear, long poInty stIcks in hand tryIng to restrIct the expansIon of RussIan gas pIpelInes Into Europe and Asia minor.
    What If they are successful and Instead of layIng pIpelInes they decIde to remove some? LIke the submarine gas pIpelInes that lay unprotected in the international waters of the North Sea that emanate from Norway, Holland, and Belgium that England depends on for over 60% of Its energy requIrements for domestIc, busIness, and gas fIred electrIcIty generators.
    It Is easy to ImagIne a scenario where RussIan submarInes lay charges over the pIpelInes to detonate sImultaneously perhaps taking out communication cables at the same time.
    Next to a nuclear attack it would represent the next worst disaster, especially if it occurred mid winter.
    Of course RussIa would be Instantly blamed, they could reply nyet we know nothIng, it was probably another AmerIcan false flag operatIon to create a pretext for attackIng our Motherland, “go away”
    My advIce for Dave Is to throw away hIs long poInty stIck and return to playIng with hIs short blunt one, at whIch I am sure he Is far more practIced and adroIt.
    It was once Rule BrItannIa, BrItannIa rules the waves. But could It be RuIn BrItannIa, BrItannIa ruined below the waves, never, never to arIse agaIn

  19. Alf Baird says:

    “rad1cal restructur1ng of the country”

    The most s1gn1f1cant 5 words I’ve seen for a wh1le. Exactly what 1s needed. But not someth1ng the SNP w1ll del1ver.

Keep our Journalism Independent

We don’t take any advertising, we don’t hide behind a pay wall and we don’t keep harassing you for crowd-funding. We’re entirely dependent on our readers to support us.

Subscribe

Don’t miss a single article. Enter your email address to subscribe for free here and receive Bella direct to your inbox.

 
Bella Caledonia