Category Archives: energy

What to do about oil prices

Oil rigs, North Sea oil, Scotland
Oil rigs, North Sea oil, Scotland, UK.
The drop in global oil prices has all sorts of annoying consequences (apart from the problems it causes an oil-producing country like Scotland). For instance, renewables are suddenly bad value for money (which is causing investment in them to drop), and recycling of plastics is now dearer than producing new stuff from oil (which again kills off recycling companies).

At the same time, it's not like we've suddenly found a lot of new oil in the ground or have discovered a way to use it without causing even more global warming. At some point in the future, oil will run out or get banned, and before either happens, prices are likely to skyrocket.

Oil prices might of course rise again well before then. The current drop is caused by a combination of factors, including a drop in Chinese demand, an increase in supply (caused to a large extent by the advent of marginal producers that are only in business because oil prices were so high for a while), and a plan by Saudi Arabia to get rid of the marginal producers by lowering prices to a very low level for a few years. We're not living in a world where prices have dropped to a new and permanently low level.

Anyway, the sensible course of action for Scotland (and the UK until we gain our independence) would be to subsidise renewables and recycling during the years of low oil prices. Unfortunately, income from oil production falls at the same time, which means there's less money to do this with.

So here's an idea: Why don't we create an inverse fuel duty, whereby the price at the pump is practically constant because the duty goes up when the price goes down, and vice versa? If a large part of this fuel duty was used to subsidise renewable energy, plastic recycling and similar projects, their subsidy would increase when oil is cheap, which is exactly what you want. At some point in the future, oil will get so expensive that the subsidy would drop to zero, which would again be perfect because at that point they wouldn't need it any more.

Sadly, we aren't independent, which means we'll have to convince the English Tories to introduce it, but they don't seem to care about renewables and such things. We really need independence more than ever!

What the new nuclear power station says about future oil prices

Nuclear Wetlands
Nuclear Wetlands, a photo by James Marvin Phelps on Flickr.
The unionist parties like to emphasise the uncertainty about future oil prices (e.g., "The tax we get from the North Sea is so volatile that the difference between the highest and lowest years is the equivalent of Scotland’s NHS budget").

However, talking about Westminster's decision to give the go-ahead for the UK's first new nuclear station in a generation, and to guarantee the investors an electricity price that is almost twice the current wholesale cost of electricity, Energy Secretary Ed Davey said:

'People won’t be paying this for ten years' time and in ten years' time we'll be in a very different world – we'll have had to replace all those nuclear power stations and coal power stations and we're likely to see carbon prices going up and so on,' he told BBC1's Breakfast.

In other words, he's implying that future energy prices will be much higher than they are at the moment, which is bad news for consumers everywhere, but excellent news for an independent Scotland. If Ed Davey expects energy prices to double over the next ten years, it means he must be expecting North Sea oil prices to rise by a similar amount, too.

Given the amounts of energy produced in Scotland, sky-high energy prices is an advantage for an independent Scotland, but this is not the case for the UK as a whole. Only in an independent Scotland can we use the increased revenue from rising oil and gas prices to make energy more affordable for the people living here.