Scottish Independence and Peak Oil

It seemed to me, as a casual but occasionally interested observer, that Salmond’s major economic case for Scottish independence was something along the lines of “with the North Sea Oil, we can have it all.” Yes, this is probably a gross simplification, and there were many other non-economic arguments for Scottish independence. However, given Salmond’s thinking that it would be a good idea to stick with the Pound Sterling, without a political union, it may not be that much of a simplification.

North Sea oil production has been in decline for many years. However, it looks like that only in the past few years has started to be noticeable. Some of this is being attributed to an aging infrastructure, but the trend line is clear: the easy reserves have been mostly tapped out, and what remains is harder to recover and a lower quality crude. Scottish Independence will not make it to the ballot in any meaningful way for another five to ten years. By that time, it will be much, much harder to ignore the signs of peak North Sea oil. The economic case for Scottish Independence will also be a much, much harder one to make without those oil revenues; Scotland will be relying on transfers from the South to a much greater degree.

Although there will be many causes, I think that Peak Oil will be a major contributor to Scotland staying in the United Kingdom for many decades to come. The bigger question is to what extent the end of cheap oil will have for political economies around the world.

(Remember, I’m not really a trained professional here. So take this all with an appropriate measure of skepticism.)