THERE were warnings last night that the gloss could be about to come off the north-east economy as the price of oil teetered below the $60-a-barrel mark.
Economists warned of job cuts to come and a fall in house prices as the region loses the cushion of booming oil prices that has enabled it to avoid the savage downturn hitting the rest of the UK.
The benchmark price of Brent crude fell to $59.02 a barrel in early trading in London from just over $63 on Friday, but bounced back later to settle at $61.41. It reached nearly $150 at its peak.
Oil industry sources sought to play down the effect of the fall, which was softened by a collapse of the pound against the dollar to $1.54 – its worst level for more than six years.
Andrew Reid, managing director of energy business analysts Douglas Westwood, predicted the oil price would recover over the next two years. But he had a warning for the short term: “You have to expect house prices will cool but not collapse in the way they have elsewhere. There may be redundancies, but I would not expect them on a huge scale.”
Aberdeen and Grampian Chamber of Commerce chief executive Geoff Runcie said the chamber was closely monitoring the oil price and noted the continued decline, despite the actions of Opec to reduce production volumes last week. He said long-term contracts and resources meant the industry was committed for substantial periods.
Among politicians, Gordon Liberal Democrat MP Malcolm Bruce said: “Clearly there is some nervousness about which may affect some developments and operations and if that happens it will affect local employment.”
Aberdeen North Labour MP Frank Doran said: “There won’t be a cancellation of projects and I do not think there will be any serious lay-offs in the oil industry although some effects may be felt in the taxi business, hotels, shops and restaurants.”
West Aberdeenshire and Kincardine Lib Dem MP Sir Robert Smith said: “There must be some concern, but obviously there is a lot of potential in the North Sea.”
SNP Treasury spokesman Stewart Hosie said the oil price could go up and down and he was confident in the long term it would continue to rise.
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