The oil and gas industry is a very important part of the Scottish economy.

It currently accounts for about 4% of economic output (GDP) and if oil revenues are included that proportion rises to about 14%. The latter currently goes to the UK Government, of course.

It has been an important industry for about 50 years, when BP began exploration in the North Sea, and we have had oil and gas production for 40 years. The North Sea is now regarded as a very mature province. In other words it is past its peak, and output has been declining for more than a decade.

Nevertheless it remains very important, particularly in the Aberdeen area and Shetland Islands. There are currently about 65,000 direct jobs in Scotland, both onshore and offshore, and indirect ones in the supply chain probably double that number.

There has been a resurgence in the last few years fuelled by high oil prices of more than $100 per barrel. That made previous uneconomic fields viable, notably in the high-cost west of Shetland area. There has been a boom in capital expenditure, with an estimated record £13 billion in 2014, according to Oil & Gas UK, the industry's representative body. New fields such as Golden Eagle and Kinnoull have been developed and the lives of existing ones such as Clair and Forties extended.

However, as we all know, world oil prices have plummeted during the last few months. The price of Brent oil, the industry marker crude, has fallen from a peak of $115 per barrel to less than $60 last week.

Doom and gloom has descended on the industry. A report for Oil & Gas UK predicted that up to 30,000 jobs could be lost over the next three years. That number is far too high, but there is little doubt that there will be a decline in activity and employment.

A critical factor is whether or not the price collapse is permanent or temporary, and to what extent prices will recover from $60. That is very difficult to assess, as are the reasons for the recent massive fall.

In some respects, it is a simple question of demand and supply, familiar to all economic students. The demand for oil has slowed down for a variety of reasons: low economic growth in some countries such as in the EU; the expansion of renewable energy such as wind and solar power, particularly for electricity generation; and people simply reducing consumption because of high prices.

On the other hand, there has been a significant increase in production, notably shale oil and gas in the USA, and, to a lesser extent, in Iraq and Libya.

Some of the bigger producers such as Saudi Arabia could have responded by reducing their output to try to keep prices high. However, the Saudis persuaded their Opec colleagues not to do that at their recent meeting at the end of November. Various commentators have given their opinions on the Saudi motives, ranging from wishing to retain market share to wanting to cause political and economic harm to countries such as Iran and the Russian Federation.

The futures markets are currently assuming the price of Brent will rise to about $80 and stay at around that level in the near future.

That would undoubtedly have a serious impact on the Scottish economy. It would result in the cancellation of proposed new field developments such as Bressay and Rosebank, and the early cessation of production of existing fields with high operating costs.

It is not well known, but about half of the activity in the Aberdeen area is now exports to oil provinces elsewhere in the world, including West Africa, the Middle East and Caspian Sea. Local companies such as the Wood Group and Abbott have done tremendously well in such export markets. They will also be adversely affected by the same trends, although not necessarily to the same extent. Operating costs in the Middle East, for example, are much lower than in the North Sea.

Sir Ian Wood, the industry veteran, believes the loss of jobs will be closer to 10,000 than the 30,000 forecast, and I agree with him. Nevertheless, that will have serious implications for Aberdeen, Shetland and other parts of the country.

Tony Mackay is an independent energy economist and consultant with 30 years' experience in the industry. He spent 12 years with the economics faculty of Aberdeen University and acts as an adviser to governments in Europe and beyond.