Scotland has endured forty years of debate about North Sea oil – who owns it, how much is there, what is it worth, can we afford to burn it, can we afford not to, and so on. It’s been a totemic issue for the SNP, with their early successes in the 1970s built in no small part on the slogan “It’s Scotland’s Oil“. Some on the fringes even believe the marine border between Scotland and the rUK was changed prior to devolution to diminish the proportion that would indeed be Scottish in the event of independence (pro-tip: negotiations over independence won’t be trumped by a Westminster statutory instrument).

More recently, though, there’s been a flurry of excitement from the nationalist side about the reserves that remain and the value of them to a future independent Scotland. There are three problems with this.

First, the argument on increased value is based primarily on a massive (and entirely plausible) projected increase in the cost of oil. The stuff is, after all, finite and globally the more readily accessible portion of it has indeed been used. However, not only do all those revenues not just accrue to Scotland, given we don’t have a nationalised oil industry, as a nation we also use a substantial amount of it. As Chris Skrebowski of the Energy Institute put it in 2008:

Alex Salmond’s predictions are simply wrong. Even with optimistic assumptions about future North Sea oil production, and even if Scotland was allocated all of that production, an independent Scotland would be likely to be a net importer of oil by 2015 or 2016. By that stage, given the global decline in output which has already begun, we will have to buy oil on the open market for two or three times the current price. It’s completely fraudulent to suggest that Scotland can just live off its oil wealth now.

The extent to which high prices benefit us while we remain a net exporter can be debated (i.e. how much of the benefit accrues to the Treasury or a future Scottish exchequer), but as soon as we’re a net importer high prices only hurt us.

oil chartSecond, although Chris’s dates there may be a bit pessimistic, the trends on output are clear. I asked a friend in the oil industry for the 1980-2020 output figures, and the graph to the left shows them for both oil and gas in kboe/day (red is oil, green is gas). The projected rise and fall again between 2012 and 2020 is down to a few factors, notably a couple of new developments plus the closure of Schiehallion during 2014 and 2015 while they replace their FPSO, effectively postponing production there for two years.

The baseline for that graph is zero, too. You’ll hear a lot over the next few years about a boom as oil output goes up from 888kb/d last year to a projected 1,429kb/d in 2016. But it’s just a blip.

The bottom line is this – the glory days of North Sea oil are over, and there is no prospect of anything like the 1999 peak in output being repeated. Last year’s figure is less than a third of that peak, and the long-term trend is down.

The third problem is this. We can’t afford to burn it all, because of a little thing called climate change which the unGreen parties are broadly ignoring, and any valuation of the reserves that assumes we can afford to burn it risks another bubble and crash.

Scotland can afford to be independent, and we are energy-rich, but our true lasting assets are the wind, the wave and the tides, not the dinosaur wine. Arguments with Westminster about who should own the latter are an embarrassing distraction. Even the climate change sceptics should realise that the raw economics make it time to plan for a post-oil economy, to invest in public transport not endless new motorways, to turn planning around so local communities come before commuting, and to switch to supporting low-carbon industries.