Friday, 20 November 2015

Is an SNP led "Indy 2" referendum finally dead for at least a generation ?

Could this new information hammer the SNP's chances 

for good ?

Very recently Alex Bell  (ex SNP policy advisor to Alex Salmond) published a report  on "Rattle" that  "The SNP’s model of independence is broken beyond repair. The party should either build a new one or stop offering it as an alternative to Tory cuts"  (Read the whole important article here )
However some of the important text that makes an Indy2 difficult is below .......
"2014 was an economic sweetspot for two reasons. It was a good year for oil, and it came after thirty good years. Thus the Scottish economy looked healthy and was able to boast that it had chipped in more to the UK treasury than it had got back over recent times.
That is not the same as being able to say the Scottish economy could afford British levels of spending, which was a significant plank of the Yes promise. That debatable point could be obscured by lots of noise, and the SNP is accomplished at shouting.
But Nicola Sturgeon knows the SNP is good at misdirection. The party’s success has been built on hard work and spin. Behind the scenes she isn’t gullible. It may work in public to rubbish claims by the Institute of Fiscal Studies that there is a gap between what Scots pay into government and what they get out in services, but only fools believe their own propaganda. The fact is a gap exists – Scotland does not earn enough to pay for its current level of spending."
The current spending gap  between what Scotland spends and what it actually earns in Tax Revenues is approximately £9 Billion pounds, this means that to be "Independent" or to take on "FFR" (Full Fiscal Responsibility) it would have to be able to fund that gap (at least), either by raising Taxes , cutting Spending (including deep Welfare cuts) or combinations of both plus potentially taking on levels of debt (which needs to be serviced ...which has added additional costs)  in the money markets. (for more on debt issues and costs read the "Rattle " article direct )
This "Onshore" Spending gap has in the past been offset by good "Offshore" North Sea Oil Revenues  on profits which in good years balances the shortfall ,sometimes even excelling it but in bad years of poor revenues the shorfall in Scottish Spending needs  is met by the RUK taxpayer as part of the "pooling and sharing" of resources arrangements with the RUK government.
It goes without saying then that with the halving of Oil prices and the hugely rising costs of operating in the North Sea the final revenues on taxable profts are now very small in fact the last reported Oil tax revenues wasn't a profit at all it was actually a cost to the UK taxpayer of around £300 million.
This means that currently the natural Scottish "onshore" spending gap is now fully exposed at around £9 billion pounds required to fill that gap. Therefore if the SNP wanted to hold another Indy2 referendum it would have to convince Scots to accept a lower standard of living than in RUK after Independence due to having to cut spending or have higher rates on personal Income tax in Scotland  (or both) this could also cause a movement of Jobs and workers which wouldn't be good for the Scottish economy either. I doubt if the Scots electorate would ever successfully vote to have  a lower standard of living as their RUK counterparts..after all do Turkeys vote for Christmas ?
It has to be assumed then that the SNP would choose to wait until better economic conditions  arrived and only then it could attempt to try convince Scots once again of a rosy and successful future, however this might be hard to achieve considering the electorate have seen how they were deceived last time.
So the ten million dollar question is short or long a period could it be until Oil prices rose to allow the SNP to have a second attempt at Independence ?
It's not just as simple as waiting to get back to where the Oil price was last year because the cost of operating in the North Sea have also risen hugely with  steel and engineering infrastructure being so old it is now needing replaced at modern day costs, this means profits and therefore taxes on profits are going to be so much smaller than they used to be in the last ten years. It's been said in fact that for Oil revenues to get back to the levels of 10 years ago Oil prices per barrel would have to get back nearer to $200 per barrel compared with the price last year of $113 per barrel. 
Recent data that has been made available from BP though now suggests that Global Oil reserves are actually going to double by 2050 and  will far outstrip demand , therefore it could be expected that Oil prices per barrel could now remain low or even go lower than now for a very very long time to come, this in turn (if its fact) is going to make it very difficult for the SNP to make another case for Independence for potentially a very long time as well... on the back of Oil revenues at least.
The SNP  could of course try also to convince the electorate to vote on accepting a lower standard of living than in the rest of the UK...but could Turkey's really be convinced to vote for Christmas..I personally don't think it would ever be successful and a second failed Referndum would sink the SNP as a political party for a very long time.
The BP article is below :.

"The world is no longer at risk of running out of oil or gas, with existing technology capable of unlocking so much that global reserves would almost double by 2050 despite booming consumption, BP  has said.

When taking into account all accessible forms of energy, including nuclear, wind and solar, there are enough resources to meet 20 times what the world will need over that period, David Eyton, BP Group head of technology said.
"Energy resources are plentiful. Concerns over running out of oil and gas have disappeared," Mr Eyton said at the launch of BP's inaugural Oil and gas companies have invested heavily in squeezing the maximum from existing reservoirs by using chemicals, super computers and robotics. The halving of Oil prices since last June has further dampened their appetite to explore for new resources, with more than $200bn-worth of projects scrapped in recent months.
By applying these technologies, the global proved fossil fuel resources could increase from 2.9 trillion barrels of oil equivalent (boe) to 4.8 trillion boe by 2050, nearly double the projected 2.5 trillion boe required to meet global demand until 2050, BP said.
With new exploration and technology, the resources could leap to a staggering 7.5 trillion boe, Mr Eyton said.
"We are probably nearing the point where potential from additional recovery from discovered reservoir exceeds the potential for exploration."
The world is, however, expected to reduce its reliance on fossil fuels in favour of cleaner sources of energy as governments introduce policies limiting carbon emissions in order to combat global warming.
"A price on carbon would advantage certain resources," Mr Eyton said.
Governments are expected to agree on a framework to limit global warming by limiting carbon emissions at the United Nation's climate summit in Paris starting this month. European oil companies have urged policy makers to introduce a global price on carbon that will favour the use of less dirty natural gas at the expense of coal.
"Ultimately, national and international policies will determine how much of and which resources will be produced."
"We envisage increasing competition between energy resources," he said. "This will likely result in increased competition in the energy market and disruption for the incumbent."
In North America, a price of $40 per tonne of carbon would make gas turbine power plants more cost-effective than coal, BP said.
However, an $80 per tonne price on carbon would make onshore wind technology competitive with gas-fired power and would also make carbon capture and sequestration with gas-fired power economic.
And while oil is expected to be the main source fuelling the transport sector by at least 2035, electric vehicles could approach cost-parity with the internal combustion engine, due to advances in battery technology, BP said.
BP, the largest operator of solar and wind power among its peers, will see its investment portfolio evolve over time in line with government policies, Mr Eyton said.
However, an $80 per tonne price on carbon would make onshore wind technology competitive with gas-fired power and would also make carbon capture and sequestration with gas-fired power economic. "
The original online report can be found via this link by clicking here
The oil price is unlikely to recover next year, according to the boss of the French energy giant, Total.Total's Patrick Pouyanne "doesn't anticipate a recovery in 2016". In fact, he thinks supply will grow faster than demand next year.
He is not alone. Last Friday, Goldman Sachs put out a note suggesting prices could fall a lot further.
"While [we are] forecasting oil prices over the next few months to be near $40 a barrel, or roughly where they are trading today, there could be another 50% to fall," the investment bank said.
Read the whole Total Oil article by clicking here 

For explanations on the Scottish economy , the "onshore" and "offshore" revenues and also on how "pooling and sharing" works to the Scottish advantage see Kevin Hagues presentations by clicking  here

Kevins main Blog and menu can be found here 
Update 12 Jan 2016 :Oil down to $31.26 per barrel.
Latest on the Oil price and how its affecting different countries ability to budget, this doesn't specifically mention Scotland but Sir Ian Wood said the North Sea Oil industry just doesn't work at $45-$50 previously , how bad this will actually be probably won't be apparent until after the publication of the next GERS report before MAY, hopefully they won't get away with trying to delay them ,,,but i wouldn't be suprised if they try this because te numbers will lose them votes

"SNP Energy Spokesman admits "No more huge Oil incomes for Scotland ever"  Click on here.

Why Electric Cars will cause the NEXT Oil Crisis fall