How Nicola Sturgeon is squandering the Scottish economy’s trump card

Ewing adds that a thriving oil and gas sector is needed to “preserve the skill base” for new green technologies, such as carbon capture and storage.

“You cannot pluck people from a bus stop and get them to do these jobs.”

The industry has not given up on persuading the SNP to support North Sea oil.

With the energy security issue soaring up the political agenda, sources say the oil industry has stepped up lobbying efforts in both Westminster and Holyrood, including meetings with Scottish finance secretary Kate Forbes.

Some in the industry have taken heart from the SNP’s more nuanced stance on the windfall tax, with UK energy firms set to pay an additional 25pc levy for the next 12 months.

The party was skeptical of a tax that targeted just one industry and said it should apply to all companies enjoying high profits.

It meant that “Scottish industry is carrying a disproportionate burden of funding what is a UK-wide response”, Sturgeon said.

A Scottish government spokesman says its “position is clear that unlimited extraction of fossil fuels is not consistent with our climate obligations.

“We are equally clear that the oil and gas sector plays an important role in our economy.”

They add that Holyrood is “undertaking in-depth analysis work to better understand Scotland’s energy requirements as we transition to net zero”.

By the time of the proposed independence vote in autumn 2023, Sturgeon may be persuaded to offer more full-throated support by a far rosier picture on oil and gas revenues.

Ironically, Sturgeon is turning cold on North Sea oil just at a time when it could bolster her economic case for independence.

Oil prices were just below $100 per barrel when the first independence referendum was held in 2014. Since then they have crashed, recovered, and turned negative at one point in the early days of the pandemic before soaring once more in 2022.

Brent crude, the UK benchmark oil price, has been above $100 per barrel almost continuously since the first half of April. While motorists have felt the pinch from prices at the pumps soaring to record highs, the oil surge is a boon for the Exchequer.

Government tax revenue from the oil and gas industry was just £600m in 2020-21 and £3.1bn last year. The Office for Budget Responsibility in March estimated it will hit £7.8bn in 2022-23 and £5bn the following year.

With the windfall tax on oil and gas producers expected to generate an extra £5bn, the projections suggest almost £13bn will be generated from the industry this year.

If such high prices were maintained for a sustained period, it would be transformative for Scotland’s national public finances, new estimates from the Institute for Fiscal Studies (IFS) reveal.

Official figures suggest Scotland’s notional deficit, including North Sea revenue, was 8.8pc of GDP in 2019-20, levels economists believe would be unsustainable. The UK’s deficit that year was just 2.6pc of GDP. The figures indicate an independent Scotland would need to turn to hefty tax hikes or austerity to stop the debt running out of control.

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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