The Wee Black Book

What happened after Scotland voted No
What happened after Scotland voted No

Energy

Being part of the UK is good for Scotland’s renewables industry”, proclaimed the No campaign throughout the referendum. “Our larger energy market makes supporting Scotland’s renewables industry more affordable”, it added a year later.

renewables safe in union

But once the No vote was safely in the bag, the UK government’s attitude towards Scotland’s vast clean-energy resources (which account for the huge bulk of renewables in the UK) changed dramatically.

renewables threatened after no vote

A few months later it was announced that the last coal-fired power station in Scotland, at Longannet in Fife, was to be closed because transmission charges levied by the UK grid made it uneconomical, after the UK government cancelled a £1bn carbon-capture scheme for the plant in 2011.

scottish power closes longannet

Before the vote, the No campaign and the press mercilessly mocked persistent claims by some independence supporters that there were large previously-untapped reserves of oil and gas in Scottish waters which were being kept quiet until after the vote. Although as it turned out, there were.

large oil finds off Shetland

Oil

It would of course be remiss of this book not to also address the wider issue of oil. Just a few months after the referendum the price of North Sea oil plunged spectacularly, and as we write it stands at around $40 a barrel, compared to over $100 at the time of the vote.

This news was naturally received with great glee in the Unionist camp, and rarely a day goes by without politicians, activists and media pundits joyously reporting the size of the “black hole” the far lower tax receipts would produce in an independent Scotland’s economy.

record the great eckscape scotsman plunging oil price

However, as noted by independent analysts, the price of oil is a double-edged sword. High prices generate tax receipts for governments, but also greatly increase the costs and pressures on businesses and consumers alike.

When fuel is expensive it costs more to transport goods or passengers, and ordinary families spend much more of their income on heating and petrol costs. Companies become unviable and jobs are lost, and the damage to the economy can outweigh the benefits to governments.

fraser of allander oil price not affecting economy

Conversely, cheap fuel is a huge boost to businesses and puts money directly into people’s pockets. In the past 18 months or so, for example, the price of petrol and diesel has dropped from almost £1.50 a litre to below £1, saving a typical family around £20 every time they fill their tank.

In February 2016 the Bank Of America published a report noting that the low oil price was bringing about one of the greatest redistributions of wealth in history, shifting $3 trillion (about £2.1 trillion) a year from rich companies to ordinary consumers.

oli crash triggers huge wealth transfer

That’s a number so inconceivable as to be meaningless in any real sense, so to give you an idea of the size, if it was divided equally among the entire population of the globe it’d be worth about £290 a year for every man, woman and child, or over £1,250 a year for the average UK family.

(In reality the figure would be much higher, because a vastly disporportionate share of the world’s wealth comes to firstworld countries rather than being shared equally.)

That money benefits governments too, because with more disposable income, people spend more, generating growth in retail and services, which in turn creates jobs, reducing state spending on benefits and increasing income tax receipts to replace the lost corporation tax from oil profits.

Fluctuations in the oil price have both winners and losers, in either direction. The Scottish media tends to present only the negative side of the oil price fall, ignoring the positives. According to GERS 2014-15 (the closest thing Scotland has to annual accounts), the net effect was that the huge oil crash saw Scotland’s total revenues fall by just 1%.