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Scotland's Oil Wealth Simplified

The issue of Scotland's oil fully came to light during the 2014 Independence referendum. We were told that the drop in the oil price would bankrupt Scotland and that the changing price "makes the case for the United Kingdom" with North Sea Oil better off under the "broad shoulders" of the UK" according to David Cameron (more on that later).

For this simple demonstration let's look at an oil revenue of £100m rather than the price per barrel. The UK has a population of around 63m while Scotland has a population of around 5.4m

The table below shows how much an oil revenue of £100m is worth per person in the UK.
United Kingdom "broad shoulders"
Population Revenue Per Person
63m £100m £1.58

The table below shows how much an oil revenue of £100m is worth per person in an independent Scotland..
Independent Scotland
Population Revenue Per Person
5.4m £100m £18.51

Oil revenue worth £18.51 per person in an independent Scotland as opposed £1.58 per person as part of the UK. That's a pretty impressive figure. The oil price would have to fall by over 93.75% before Scotland would start to be worse off than if we were in the Union.

Some context is needed here.
In 2008 oil hit a high of $145 per barrel and fell to $35 per barrel, a drop of 75%. Our £100m revenue example now drops by 75%
Oil revenue in the UK would now be worth only £0.39 per person.
Oil revenue in an independent Scotland would now be worth £4.62 per person, still way higher than the £1.58 it was worth before the drop in prices.

More context if you need it.
The price of oil fell by 44% in 2014. This is the big fall they said would have bankrupt Scotland but somehow didn't bankrupt the UK. Our £100m revenue example now drops by 44%.
Oil revenue in the UK would have been worth £0.88 per person.
Oil revenue in an independent Scotland would have been worth £10.36 per person.

Now back to David Cameron. Here's a video of David Cameron before the EU referendum in 2016 explaining how Norway is happy as "they have the same amount of oil as we do but only 4m people rather than 60m people so that makes a differrence".


So the next time you are told that a fall in the oil price would bankrupt Scotland, you know what to say.

Andy

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