Salmond’s energy impasse exposed

Check the oil price, Alex

Check the oil price, Alex

I’ve always had a high regard for Alex Salmond as a political operator – though I disagree with just about all of his policies.  But he’s seen so many set-backs recently that one has to feel a grudging sympathy for him – despite his surprisingly high ratings in the polls ahead of the General Election.

The financial crisis underlined the massive economic threat which Scotland’s very large banks pose to an independent Scotland.  Without the UK, the country might well have seen the same problems as Iceland as the banks went down, with no lender of last resort able to take up the strain.  Then Salmond went down to defeat in the Independence Referendum – though his poll ratings have risen Phœnix-like since.  But yesterday, a happy coincidence called to mind another problem which he will need to address.

I was working on my energy speech for our Spring Conference in February, when I received an e-mail from an oil industry worker from Aberdeen, asking me to clarify UKIP’s position on taxation of North Sea Oil operations.  Naturally, this got me thinking about Scotland and energy.  I should dearly like to include a section on the subject in my Conference Speech, but time constraints make that difficult.  In any case, while I’m UKIP’s Energy Spokesman, I’m not our spokesman on tax and fiscal matters – that’s my good colleague Patrick O’Flynn MEP.

In a matter of a few weeks we will of course be publishing our UKIP Election Manifesto, and it will contain our fiscal proposals, all fully and independently costed.  But I doubt that it will contain sector-by-sector industry-specific tax plans – that would seem to me to be premature at this stage.  But let me speculate (my personal view) about the broad-brush approach we should be taking to the issue.

The drop in the oil price over recent weeks has been dramatic – more than 50% — and I don’t claim fully to understand it.  Clearly Saudi Arabia has decided, as a matter of strategy, to try to “see off” higher-cost producers, most notably Iran and Russia, but also Africa and South America.  In this context, North Sea Oil is collateral damage.  On the face of it the low oil price also looks very damaging to the shale gas/oil revolution in the USA.  But here geo-politics comes into the equation.  While hurting in the shale department, I suspect that the USA may in fact be very happy with the damage which the low oil price is doing to Vladimir over in the Kremlin.  I suspect that energy prices are hitting Russia far harder than the sanctions which the West has applied post-Ukraine.

Now clearly no British government can fully protect the North Sea Oil business against a halving of oil prices.  Global prices are down to – or below – the cost of production in Scotland.  There will be job losses.  There will be exploration projects cancelled.  Times will be tough in the Granite City.  The objective of UK tax policy with regard to the North Sea must be to minimise the damage, and to ensure that the industry, and its assets, survive, and remain ready to ramp up again, as and when prices recover.  It would be a rash man who made hard-and-fast predictions about the future trajectory of oil prices, but my bet is that the current low prices are temporary.  Whether that means six months or ten years, who can say?   But in my view, “Peak Oil” has disappeared over the horizon, and it will be a long time before Ed Davey’s dream comes true – the day when fossil fuel prices are so high that wind power starts to look competitive.

But however daunting the prospects are for the North Sea industry, the impact on Salmond, and Scottish Independence, is surely far greater.  Salmond’s reliance on oil for the future of the Scottish economy always looked unwise, with many industry commentators suggesting that the SNP’s forecasts were unduly optimistic, and vulnerable to volatility.  At today’s oil prices, the SNP’s position looks absurd.  And while no one could have predicted quite what is happening today, we can fault Salmond and the SNP for failing to recognise the inherent risk of building Scotland’s economic future on a single industry with volatile pricing and (in the North Sea) a rapidly dwindling resource base.

More generally, Salmond’s approach to energy perfectly illustrates the damaging position of ignorance from which so many politicians (including Ed Miliband – and Ed Davey) approach the energy business.  Salmond wants Scottish electricity to be 100% renewable by 2020.  Even The Guardian sees the folly of that.

Doesn’t Alex know that intermittent renewables require conventional back-up?  So if Scottish electricity were to be 100% renewable, he would presumably rely on fossil fuel back-up from England to fill the gaps.  In environmental terms, that’s no better than having gas-fired power plants in Scotland.  And in political terms, it doesn’t deliver Scottish Independence – on the contrary, it undermines it, and makes Scotland ever more dependent on England.

The other wonderful irony of the SNP’s position is that while they’re posturing, and burnishing their green credentials, and planning for 100% renewable electricity generation in Scotland, they’re also predicating their Scottish economic plans on oil.  That oil has to be burned somewhere, and in terms of the global environment, a ton of CO2 emitted in Hong Kong is no different from a ton of CO2 emitted in Hibernia.  It’s utterly hypocritical to parade your green credentials while basing your economy on fossil fuels.

So.  A memo to Alex Salmond.  You don’t have a viable economic plan for Scotland.  You can’t rely on North Sea Oil to pay the rent.  Your 100% renewable plan can never save the planet, but it may well make Scottish voters much poorer than they need to be.

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5 Responses to Salmond’s energy impasse exposed

  1. Ex-expat Colin says:

    Scots councils looking through new voters addresses for council/poll tax arrears No matter what, its a tax and an everlasting debt. Salmond has managed to get that on hold though? Unintended consequences..again, again and again!

    Can I have mine written off in England please….

    The M. East has plenty of 5 and 10 year plans to accomplish, so the oil price won’t hang down for too long. The longer it does the more widespread their enemies I think. Its just another piece of large scale damage in amongst many others…like the EU/Euro and the Free Speech thing. Perhaps the Swiss suddenly got p*ssed off with extended can kicking?

    I thought I saw that the Paris weaponry (AK47) stuff supplied via Ukraine? Plenty around and leeching easily though our borders.

  2. Other casualties of the saudi oil dumping are the US fracking and Canadian tar sand operations, which will soon grind to a halt. This is monopolism at it’s end game. The ruling elites LIE about everything, including the trifecta of Carbon climate forcing, ‘sustainable’ energy and ‘peak’ oil. See “Becoming A TOTAL Earth Science Skeptic” for a summary of these science FRAUDS.

  3. omanuel says:

    Yes, it is wake-up call and the question is “Fraud or Incompetence?”

    FRAUD is the better explanation.

    The original (1945) political agenda, “to save the world from nuclear annihilation,” was triggered by [1] and inadvertently generated [2,3]:

    1. Aston’s promise and warning about nuclear energy in his Nobel Lecture on 12 DEC 1922 [1].

    2. Unreported chaos & fear of world- wide nuclear annihilation in AUG-SEPT 1945 [1].

    3. Wide-spread acceptance of false nuclear and stellar models in 1946 [2]

    4. Isolation of humanity from the Creator, Destroyer and Sustainer of every atom, life and world in the solar system today [3], . . .

    . . . a volume of space that has now expanded over the past five billion years to be now greater than the combined volumes of ten billion, billion Earth’s!


    1. Aston’s PROMISE & WARNING (12 Dec 1922); CHAOS & FEAR (Aug -Sept 1945)

    2. Why Did Our Government Deceive?

    3. “Solar energy,” Adv. Astronomy (submitted for on-line review, 6 Jan 2015)

    Click to access Solar_Energy_For_Review.pdf

  4. Katie says:

    Any sensible person voting in the independence referendum could see what might happen. Why aren’t interviewers pushing Sturgeon to tell us what the SNP would be doing to alleviate this problem if they were now independent and not able to rely on the money coming from the rest of the UK? I dread to think how much tax ordinary people in Scotland would be facing now. Salmond wanted independence at any cost. All right for him – he can move onto another highly paid position while mugs like us have to bail Scotland out. The independence issue has also dented the housing market here in the South West of Scotland. Agents are telling us that the English are not moving here like they were. Dumfries and Galloway and Ayrshire were popular places to move to but the English are holding back because of the uncertainty of what will happen in Scotland. The housing market is DEAD. Nothing is moving and much of that is also due to Salmond/Sturgeon’s stupid energy policy of chucking up wind farms everywhere. God help us if they ever get what they want.

  5. catweazle666 says:

    it will be a long time before Ed Davey’s dream comes true – the day when fossil fuel prices are so high that wind power starts to look competitive.


    CHART OF THE DAY: The Epic Implosion Of The Green Energy Bubble

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