I know, I keep saying that GDP is not a useful measure of the health of an economy. Most real experts, i.e. not the ones in our media, have long discounted GDP. See this for a reminder:
Down with the cult of GDP. For us economists, it’s yesterday’s yardstick
However, given their fondness for GDP, it’s worth BBC Scotland noting this good news for us. I feel sure they must. Here’s what Energy Voice had to say, today:
‘Scottish GDP grew last year in line with a slight (sic) upturn in North Sea revenues. The latest quarterly national accounts show that when a geographical share of offshore oil and gas is included, GDP grew by 1% in the last three months of 2017 and 3.4% over the year as a whole. Over the year, Scotland’s geographical share of North Sea oil revenues returned to a surplus, with tax revenues rising to just over £1 billion, up from minus £130 million the previous year. Onshore GDP is estimated at £152.1 billion, or £28,046 per person, in current prices.’
As for the UK, or the EU, for that matter:
‘Quarterly growth in the 19-member single currency slipped to 0.4 per cent in the three months to March, but in the UK, growth was just 0.1 per cent.’
Bear in mind the above £1 billion tax revenue is actually only a tiny share of what the Treasury should be gathering, even at 20% corporation tax-level.
Here’s the Office for Budget Responsibility forecast reported in Energy Voice:
‘A new report predicts UK oil and gas revenues will be £400million higher every year from now until 2023 – in the latest sign that the North Sea is on the mend. In its fiscal and economic outlook, the Office for Budget Responsibility (OBR) said its revenue forecast had been revised upwards due to higher oil prices, increased production and lower costs. The Oil and Gas Authority recently lifted its long-term forecast for North Sea production by 2.8billion barrels of oil equivalent to 11.7billion barrels.’
They then predict tax revenues of £1 billion for each of the next five years.
Here’s what the revenue could/should be:
11.7 billion barrels at $70 per barrel, equals total revenue of $819 billion. Production costs estimated by the BP chief, last year, to be no more than $15 per barrel equal $175 billion. So that’s $644 billion or £474 billion, in profit, before wages and shared dividends yet the OBR thinks we only get £5 billion in tax revenue for the first five years. So that would be £34 billion by 2050. Isn’t that a bit low? UK corporation tax at 20% would give nearly £100 billion. What’s going on here?
Taking the above figures, could Scottish GDP actually have grown by 30 times the UK figure in Q1?