• Text size      
  • Send this article to a friend
  • Print this article

Leading forecaster questions SNP's second oil boom claim

ALEX Salmond's claim that Scotland is on the cusp of a second oil boom has been called into question by the head of the UK's independent economic forecaster.

Robert Chote, head of the Office for Budget Responsibility, said record recent investment in the North Sea would serve merely to "stabilise" production and arrest long-term decline.

Giving evidence to Holyrood's finance committee, the economist defended the OBR's latest forecasts against claims by SNP ministers that the figures were unduly pessimistic. His intervention renewed pressure on the Scottish Government to update its own estimates for North Sea tax revenues, which are substantially higher than the OBR figures used by the UK Government.

Challenging the OBR's figures, SNP MSP Jamie Hepburn accused the forecaster of failing to take into account oil companies' multi-billion-pound investment in North Sea facilities.

But Mr Chote dismissed the criticism.

He told MSPs: "If you were to come down from Mars and look at the path of oil production over the last few years you would see it's a pretty straight downward line.

"Therefore, I suspect that the puzzled Martian would look at our expectation that oil production is now going to go flat and say 'well why on earth are you expecting this decline that we've seen over the last decade or so not continuing?'.

"The reason for that is the increase in investment."

The OBR cut its oil revenue forecasts at the time of last month's Budget by nearly £3billion between now and 2018/19.

For 2016/17, the year the Scottish Government plans to declare independence, the OBR predict revenues of £3.2billion.

By contrast, the Scottish Government's most cautious estimate for the same year is £6.8billion.

In total, the Scottish Government expects the country to raise at least £34.6billion in North Sea taxes between now and 2017/18. According to the OBR, the UK will collect £18.8billion over the same period.

The Scottish Government's figures, which prompted the First Minister's "oil boom" claim, were produced more than a year ago and have been used repeatedly by the SNP to argue that an independent Scotland could afford better public services and a more generous welfare system than the UK.

Scottish Conservative finance spokesman Gavin Brown said: "For months now the First Minister has claimed that the OBR failed to take into account the investment being made by the industry.

"Now the OBR has given a direct response to this, showing that absolutely not to be the case.

"The Scottish Government promised a month ago to release updated oil figures within a matter of weeks.

"We are still waiting for these, and it's imperative that they are published as soon as possible."

Mr Chote's comments echoed a report last month by the Glasgow University-based CPPR think tank which said the First Minister's oil boom claim was "not readily supported by the evidence".

The Scottish Government will update its oil revenue forecasts "in the coming weeks," a spokesman said.

He added: "There is wide acknowledgment that Scotland's oil and gas wealth is an extremely valuable resource that will continue to yield for many years to come, and with investment at current levels, it is clear operators have continued confidence in the future profitability of the sector."

Contextual targeting label: 
Local government

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

228611