As pious hopes go, suggesting that the North Sea should not be used as a political football in the current Scottish constitutional debate must rate pretty high.
Whatever our constitutional status, the imperatives for our oil and gas industry will remain much the same – to maximise safety, extend production, access new fields and support the highest possible number of jobs.
As Dick Winchester points out in his column on page 10, the Rubicon in terms of doing things very differently was crossed 30 years ago when the then PM, Margaret Thatcher, privatised Britoil and we in the UK lost our national champion capable of taking a long-term view.
That was the crucial act which determined that, whatever happened thereafter, comparisons with Norway would be of the apples and pears variety – two different models each with its own priorities and outcomes.
So, in the absence of real differences about future approaches, hypothetical ones have to be created. And what that has turned into is a debate about how much money the North Sea is likely to yield for its political overlords, wherever located, in the decades ahead.
For a politician, the great advantage of this debate is that the answer cannot be proven one way or another. It is all in the future. It is all about hypothesis. So the challenge is not to prove any particular facts but to win the battle of claim and counter-claim.
There is, however, one indisputable fact which makes the North Sea so important to the constitutional debate.
Within the United Kingdom, oil and gas revenues represent 4% of the overall tax take. Within a separate Scotland, they would represent around 17% of overall revenues.
And therein lies the paradox. “Scotland’s Oil” would certainly mean more proceeds of the North Sea remaining in Scotland. But it would also mean a far higher level of dependency on this single source of revenue to make the nation’s books balance.
All of this was spelled out in the paper written for internal Scottish Government consumption by John Swinney, the Finance Secretary at Holyrood, and subsequently leaked.
And it is one phrase within that paper which placed the issue of North Sea revenues centre-stage.
Acknowledging their volatility, Swinney said that if they delivered less than what their current assumptions are based on, “the affordability of state pensions” would be called into question.
At that point, the reliability of North Sea revenues suddenly became everybody’s business.
While many on both sides of the constitutional argument have deeply embedded positions that are impervious to economic arguments; this is probably not the starting-point for the majority who are more concerned about their pensions than ideology.
The furore surrounding publication of this paper led to an instant response from the Nationalists who proclaimed a second “North Sea Boom” and predicted an oil price of $113 a barrel; somewhat in excess of the $91 being used by industry analysts – or indeed the $101 at which benchmark Brent Blend stands as I write.
As I say, the great merit of this debate from the protagonists’ point of view is that there is no definitive answer. And indeed, it is possible for both sides to be at least partially right in terms of evidence while extrapolating entirely different conclusions.
The use of the word “boom” to describe new announcements of proposed investments in the West of Shetland sub-province would, in normal shorthand parlance, be uncontroversial. We all want to believe in booms and we all want to see the life of the industry extended.
Where the different interpretation arises is what this “boom” translates into.
The Nationalists claim that it means more production and therefore increased revenues, and hey presto your pensions are assured. But they have found little independent backing for that analysis.
Since the North Sea started to tail off in the 1990s, the challenge has been to make new discoveries, bring in new players with less exalted expectations and deploy new technologies in order to slow the rate of decline – not to create an expansion of production as the words “new boom” might suggest.
And, in full knowledge of recent developments, that is still pretty much what the analysts are predicting.
Production has fallen sharply over the past two years, though it is expected to recover a little over the next few before levelling off.
So, no boom, but hopefully stability and continuity.
Under any normal circumstances, that would read like a pretty good news story. But these are not normal times – and therefore the imperative arises for both sides to paint scenarios which fit their cases; therefore either excessively cautious or irresponsibly over-optimistic, dependent on one’s vantage point.
An overlooked fact in this debate is that the price of oil and volumes of extraction are not the only determinants of revenues for the Exchequer.
Ultimately, these depend on the taxation regime that is in place and the incentives that have been created in order to stimulate activity.
One of the few things the Coalition government gets credit for is having encouraged West of Shetland development through a tax regime which is pretty much what the industry asked for.
But it will mean substantially lower than normal revenues if and when these developments come onstream.
The certainty is that no amount of political rhetoric will produce another drop of oil or therm of gas.
The electorate can look at the claims and counter-claims in order to form their own conclusions while the industry gets on with making the best of the hand it has been dealt.
And I suspect nothing could be further from its mind than the constitutional debate.
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