NORTH Sea oil has played a central role in the debate over Scotland’s economy and the country’s future since it was discovered in the 1960. It continues to be the subject of debate as we move away from fossil fuels towards the renewables which will help the world tackle the climate crisis and give our country the opportunity to become a leading player in a brave new world of sustainable energy.

But before looking at the future, we need to look back at how opportunities of the past were squandered by a UK Government which had no interest in using our natural resources to benefit the majority of people whose lives they could have transformed.

The discovery of North Sea oil should have established Scotland as one of the world’s richest nations. By the time oil production started from the Argyll and Duncan oilfields (now the Ardmore) in June 1975 the world oil price had quadrupled because of the 1973 oil crisis. It would go on to triple after a similar crisis in 1979.

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It was so valuable that a 1973 report by Professor Gavin McCrone, who was employed at the Scottish Office, projected it would have created a “chronic surplus to a quite embarrassing degree” for the economy of an independent Scotland. And it was so politically contentious that McCrone’s report was kept secret for fear of encouraging the campaign for independence. The UK Government only made the report public in 2005 when new freedom of information legislation forced them to do so.

Westminster continues to this day to use oil and gas revenues to fund and underpin the UK economy. And it has mismanaged Scotland’s natural resources to an embarrassing degree. As a result, Scotland’s oil and gas revenues are dwarfed by Norway’s. Norway is an independent northern European nation of similar size to Scotland which is the richest nation in the world despite having produced less oil than Scotland – it just reinvested its oil wealth for the country’s people, communities and economy.

For example, research by Business for Scotland has recently found that between 1975 and 2020 Norway earned £293 billion more in oil and gas revenues than the UK Government, while producing 4% less oil. Norway’s £665bn in revenues was then invested in Norway and in sovereign wealth funds. Therefore, it was effectively shared between 5.4 million people. Scotland’s oil and gas revenues were mostly not reinvested in Scotland nor in a wealth fund and so were shared amongst 65 million people, but more accurately used to pay off the debts accrued by England in the 1960s and 70s when it was effectively bankrupt.

Scotland is not subsidised by the UK. In fact, 100% of Scotland’s debt is allocated from the rest of the UK to Scotland. Scotland is subsidising the UK through oil and gas revenues.

Westminster has not changed its behaviour and so Scotland has had to sit and watch other countries do the right thing to maximise the benefits of oil. Norway for instance. It set up an oil fund in 1990 and had amassed more than $1.2 trillion by November 2020. In May 2018 it was worth about $195,000 per Norwegian citizen and not even Covid could stop it growing.

Today, Scotland has another chance to reap the benefits of natural resources, this time in the form of renewable energy. And this time it can’t afford to let Westminster fritter away the money again.

Our long relationship with fossil fuels, which have a limited lifespan in any case, will have to change because of the climate crisis. Scientists warn we have less than 10 years – maybe much less – before climate disaster becomes irreversible. The future of the planet is at stake.

Scotland became the first country in the world to recognise the climate emergency, which it did in April 2019. This commitment is at the heart of Scotland’s economic policy. First Minister Nicola Sturgeon only this week unveiled new policies to move us closer to becoming a net-zero society by 2045 – five years earlier than the UK. The eyes of the world will be on Glasgow later this year when it hosts the COP26 summit on global change.

Many would argue that if Scotland was truly committed to such change, it would call a halt to the production of oil and gas. However, it’s not that simple. Scotland is one of only two European nations with significant oil reserves. Since the 1970s, oil and gas have been major contributors to Scotland’s economy both in terms of GDP, employment and taxation.

Income from North Sea oil and gas may be past its peak, but the outlook for the sector is healthy as new fields have increased production flows and have significantly reduced production costs.

AS a result, oil companies are generating their highest profits in four years and investing in new capital projects. West of Shetland exploration in particular has up to 13 new developments planned. Around 9000 jobs are related to extraction but the total number of jobs, including those indirectly supported by the industry in Scotland, was approximately 105,000 in 2019.

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Oil and gas supply chain company exports amount to £4.5bn, almost matching the £4.65bn in actual oil and gas exports. Scotland’s territorial waters accounted for 96% of the UK’s oil and natural liquid gas production in 2017-18. If Scotland were to unilaterally stop producing oil, the price of oil would rise, prompting other producers to increase production to meet demand and Scotland’s ability to invest in a renewable future would be severely limited. Nevertheless, the climate emergency obviously demands that we scale back our oil and gas production and scale up our renewable energy production and we’ve been doing just that. Crucially, oil has a significant future value as a chemical ingredient and for lubrication, and can still be a viable industry even if we decided to burn less of it to aid the environment.

Recent figures reveal 97.4% of electricity demand in 2020 was met from renewable sources.

The wind-down of oil production has to be accompanied by the full utilisation of our current resources in order to smooth out the transition to a low-carbon economy.

Scotland is certainly well-placed to thrive in the renewables sector, but renewables need time to develop in order to ensure that the transition to a low-carbon economy does not adversely affect the poorest in society, who are most sensitive to rising energy prices. There are three reasons for this:

- Environmental: we now have proof that climate catastrophe will lead to the eventual destruction of the modern economic system. How countries choose to manage this will be critical, particularly those with abundant natural resources such as Scotland.

- Economic: the UK currently makes little revenue from oil and gas. One of the reasons for this is that Westminster cut petroleum revenue tax to 0% in 2015. This has not to benefit the industry in the way that was promised. For instance, between 2015-2018, the UK government only gained £3.3bn from oil and gas, 95% less than Norway.

- Political: Brexit is causing massive damages to our economy. It proves that Scotland and the UK have fundamental differences and it seems inevitable that they will move towards different paths.

The UK Government has no intention in changing the way it manages oil and gas. The only way of achieving that change would be to give the power over oil and gas resources to Scotland. And that will only happen with independence.

With independence, Scotland could properly manage a just-transition from economic dependence on fossil fuels to take our rightful place at the heart of moves to develop renewables to power the world, rather than destroy it.