• Since 2000, North Sea oil production has fallen by two-thirds from 4.5million barrels to 1.5million barrels a day.
• The Office for Budget Responsibility (OBR) has downgraded its long-term North Sea oil tax projections by a massive £21 billion.
• Division of North Sea oil assets will probably fall between the current population-based analysis used by the UK Treasury and the Scottish government’s claim for a geographic split. Many of the Scottish government’s promises are based on their assumption they’ll get a geographic share, which is optimistic.
• It is widely accepted that the North Sea oilfields are mature and in long-term decline. Given the difficult deep-sea geology, it’s becoming more expensive to extract.
• The importance of oil revenues to the UK Exchequer is less than 2% of the total tax take. So the UK is well able to endure the volatility of oil prices. However, for Scotland, oil would be critical. In 2012/2013, oil revenues would have accounted for more than 10% of Scottish tax revenues, down from 17.5% the previous year. Such swings would be very hard for an independent Scotland to cope with.
• The UK’s population is approximately 11 times that of Scotland, so while the oil revenue is of critical significance to the Scottish economy, to the rest of the UK the dent would be more marginal.
For more in-depth analysis, please click here for the full-version of the white paper, Much cost, little benefit