I know higher oil prices mean it costs more to fill your car’s tank. I know, also, that many of you would rather see a green future for Scotland. However, in the battle for independence a strong Scottish oil and gas industry remains a very useful card to hold.
For more than a year now, oil industry insiders have been predicting a return to $100 per barrel. I’ve reported on four earlier predictions here:
First in January 2018, we read from the Chief of Aramco:
‘Global demand for crude oil is likely to grow for at least the next 10 years. This is because economic growth in emerging economies including China and India will spur demand in sectors such as transportation and chemicals. Although some believe that the demand for oil will decrease due to the spread of electric vehicles, it will take a considerable amount of time to be fully implemented. One of the major challenges is the high costs of setting up necessary infrastructure such as charging stations.’
Second, also in January, in Oil and Gas People, Takayuki Nogami, a chief economist of the Japan Oil, Gas and Metals National Corporation, predicted growing demand and the possibility of prices rising to $100 per barrel.
Third and still in January, we had London-based consultancy, Energy Aspects predicting, in Energy Voice, that Brent prices will rise above £100 next year:
‘A slump in new production outside the U.S. shale patch in 2019 could help to send Brent crude briefly back above $100 a barrel next year, according to London-based consultancy Energy Aspects.’
A fourth prediction arrived in May from the Bank of America via CNN:
‘The bank’s analysts wrote Thursday that collapsing oil production in Venezuela and potential export disruptions in Iran could push the price of Brent crude as high as $100 per barrel in 2019…… At the same time, the analysts said the global economy is growing at a healthy pace and supporting higher demand for oil. The extra demand is helping to wipe out an oil glut that has plagued markets.’
Fifth, on the 22nd June 2018 in Oil & Gas People:
‘If OPEC and its allies don’t increase production, oil prices could rise above $100/bbl, said Pioneer Natural Resources Co. Chairman Scott Sheffield.’
How much could we earn at $100 per barrel?
Remember the OBR, a George Osborne creation, regularly forecast doom and despair for an independent Scotland back in 2014. These same forecasts were widely and gleefully used by our Unionist media. Here’s how Energy Voice reported the story in March:
‘A new (OBR) 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.
Only £1 billion? Nuts!
Here’s how I do the sums:
11.7 billion barrels at $100 per barrel equals total revenue of $1.1 trillion! Production costs estimated by the BP chief, last year, to be no more than $15 per barrel equal $175 billion. So that’s $925 billion or £697 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 us more than £140 billion. What’s going on here?
Finally, there have been new discoveries since then and there will be, no doubt, more in the years to come.
Let’s not throw this away a second time. Westmonster will just use it to cover the costs of Brexit.
GMS today had a report about the current OPEC meeting and the demand by President Trump and others that the price of oil be brought down by greatly increasing rates of production. Naturally the slant was proAmerica and anti-Iran (who want to keep prices high, not least because of the likelihood of US/Israeli/UK sanctions. However, from a Scottish perspective they want to reestablish the narrative of falling oil prices scuppering our apparently solely oil-dependent economy.
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