It's Scotland's oil

It's Scotland's oil was a widely publicised political slogan used by the Scottish National Party (SNP) during the 1970s in making their economic case for Scottish independence. It was argued that the discovery of North Sea oil off the coast of Scotland, and the revenue that it created would not benefit Scotland to any significant degree while Scotland remained part of the United Kingdom.

The SNP campaigned widely in both the February 1974 UK General Election and subsequent October 1974 UK General Election using this slogan. At the February election the SNP gained seven seats in the House of Commons and 22% of the Scottish vote, rising to eleven seats and 30% of the vote in the October election. The idea behind the slogan has proven to be controversial in discussions surrounding the financial viability of an independent Scottish state and still resonates to this day ["Scotland's oil: Does oil in Scotland have a future?" [http://www.dundee.ac.uk/cepmlp/journal/html/Vol14/Vol14_5.pdf Professor Thomas W Walde - Thomas Walde Professor of International Economic Energy and Natural Resources Law at the University of Dundee] ] .

Background

The outcome of the February 1974 General Election saw the incumbent Conservative government led by Prime Minister Edward Heath with a plurality of votes in the election, but without a majority of seats in the House of Commons after the withdrawal of support by the Ulster Unionist Party. The Labour Party led by Harold Wilson had four more seats in the House of Commons than the Conservatives and after the break down of coalition negotiations between Heath and the Liberal leader Jeremy Thorpe, the Labour Party led by Harold Wilson ascended to power governing as a minority administration. In October 1974, Wilson went back to the country to ask for a renewed mandate.

During this time, in Scotland support for the Scottish National Party had been increasing after the seminal victory of the SNP candidate Winnie Ewing at the 1967 Hamilton by-election. The political instability surrounding the general elections of 1974 represented a time of intense political campaigning in the UK, which further brought the SNP to prominence. It was during this time that the slogan "It's Scotland's Oil" came to the fore with the February election seeing 7 SNP candidates returned, rising to 11 in October. Some well known MPs such as Tam Dalyell believe this was in no small part due to the "It's Scotland's oil" slogan employed by the Scottish National Party ["Independent Online edition December 2005" [http://news.independent.co.uk/uk/this_britain/article331945.ece Tam Dalyell, who served as Labour MP in West Lothian for 43 years, agrees.... "It could have tipped the balance it a number of seats including mine. Oil was very much a totemic issue] ] .

The economic background to the claim was the discovery of oil in the North Sea in the 1960s, and its coming on line in the 1970s. The majority of the largest oil fields in the UK sector of the North Sea were found in the waters to the north and east of the Scottish mainland, with the more northerly fields found to the east of the Orkney and Shetland islands ["School Science from The Energy Institute" [http://www.schoolscience.co.uk/content/4/chemistry/petroleum/knowl/images/fields.gifMap of North Sea oil fields] ] . Aberdeen became the centre of Britain's North Sea oil industry, with many oil terminals such as that of Sullom Voe on Shetland and Flotta on Orkney and at Cruden Bay and St Cyrus on the north east coast of Scotland, being built to support the North Sea oil industry. In the early 1970s, there was a great deal of economic turbulence with the 1973 oil price shock caused by the Yom Kippur War, resulting in rising inflation coupled with high unemployment, recession (also known as stagflation) in Scotland and the rest of the United Kingdom ["Scotland on Sunday", January 1, 2006 [http://scotlandonsunday.scotsman.com/business.cfm?id=392006 How North Sea oil calmed the UK's crisis ridden waters] ] . Thus the economic argument that formed the basis of the slogan was that while Scotland was part of the United Kingdom it had no control over royalties and revenue from the majority of the oil which lay in the Scottish sector of the North Sea, and it thus could not be used to benefit of Scotland economically.

Reality of the claim

Given that Scotland is not a sovereign state, it has no effective maritime claims and for such purposes is part of the maritime claims of the United Kingdom. Therefore it could be argued that there is no definitive 'Scottish' sector of the North Sea in the same way there is a Norwegian sector or a Danish sector, or indeed a UK sector. However due to the existence of two separate legal systems in Great Britain - that of Scots law pertaining to Scotland and English law pertaining to England and Wales, constitutional law in the United Kingdom has provided for the division of the UK sector of the North Sea into specific Scottish and English components ["Parliament of the United Kingdom - Standing Committee B, Energy Bill (2004) Lords" [http://www.publications.parliament.uk/pa/cm200304/cmstand/b/st040608/pm/40608s01.htm Hansard discussion on the subject] ] . The Continental Shelf Act 1964 and the Continental Shelf (Jurisdiction) Order 1968 defines the UK North Sea maritime area to the north of latitude 55 degrees north as being under the jurisdiction of Scots law ["United Nations Convention on the Law of the Sea" [http://www.un.org/Depts/los/LEGISLATIONANDTREATIES/PDFFILES/GBR_1968_Order892.pdf UK Legislation - The Continental Shelf (Jurisdiction) Order 1968] ] meaning that 90% of the UK's oil resources were under Scottish jurisdiction ["Independent Online edition December 2005" [http://news.independent.co.uk/uk/this_britain/article331945.ece By the mid 1970s, international convention had already agreed that the North Sea north of the 55th parallel was under Scottish jurisdiction. That meant around 90 per cent of the UK's oil and gas reserves fell within Scottish waters] ] ["Murkens, Jones & Keating (2002) p183] . In addition, section 126 of the Scotland Act 1998 defines Scottish waters as "the internal waters and territorial sea of the United Kingdom as are adjacent to Scotland" ["Scotland Act 1998" [http://www.opsi.gov.uk/ACTS/acts1998/80046--l.htm#126 Section 126 - Interpretation] ] . This has been subsequently amended by the Scottish Adjacent Waters Boundary Order 1999 which redefined the extent of Scottish waters and Scottish fishery limits ["Statutory Instrument 1126 of 1999" [http://www.opsi.gov.uk/si/si1999/19991126.htm Scottish Adjacent Waters Boundary Order 1999] ] ["Scottish Adjacent Waters Boundary Order 1999" [http://www.opsi.gov.uk/si/si1999/99112601.gifMap of the extent of Scottish Waters] ] .

Recent evidence by Kemp and Stephen (1999) has tried to estimate hypothetical Scottish shares of North Sea Oil revenue by dividing the UK sector of the North Sea into separate Scottish and UK sectors using the international principle of equidistance as utilised under the United Nations Convention on the Law of the Sea (UNCLOS) - such a convention is used in defining the maritime assets of newly formed states and resolving international maritime disputes. The study by Kemp & Stephen showed that hypothesised Scottish shares of North Sea oil revenue over the period 1970 to 1999, varied to as high as 98% ["Murkens, Jones & Keating (2002) p189"] dependent upon the price of oil and offset against taxable profits and the costs of exploration and development.

Nevertheless a Scottish share of North Sea oil is never formally alluded to as part of Scotland's net fiscal position and is treated by HM Treasury as "extra-regio" resources ["Government Expenditure and Revenue (Scotland) 2002-03" [http://www.scotland.gov.uk/Publications/2004/12/20411/48778 In the Regional Accounts, the UK Continental Shelf is included in a separate region of the UK (the Extra-regio territory) and is not allocated to specific geographic regions] ] . The BBC economist Evan Davis however reported prior to the 2007 election that, the Barnett formula, already allows Scotland to sustain higher levels of per capita public spending relative to the rest of the UK, which is approximately equivalent to its disproportionatly high annual contribution of tax revenues to the central UK Treasury from Oil production [cite web |url=http://www.bbc.co.uk/blogs/thereporters/evandavis/2007/04/the_scottish_gamble_1.html |title= The Scottish gamble |publisher=BBC News|date= 2007-04-30|accessdate=2007-06-20] . However Scotland's per capita spending growth, relative to the rest of the UK, has in recent years, been nominally reduced by the operation of the Barnett Formula, in order to bring public spending levels into line with the UK average, in a phenomenon that had been dubbed the "Barnett Squeeze". [cite web |url=http://www.economics.stir.ac.uk/staff/dnfb1/Barnett%20Formula.pdf |title= The Barnett Formula |author=Professor David Bell |publisher=University of Stirling |date= January 2001 |accessdate=2007-12-27]

Recent evidence

Evidence unearthed in late 2005 under the Freedom of Information Act has shown significant UK government concerns over the rising tide of Scottish Nationalism during the early part of the 1970s and the consequences that this may have had upon ownership and control over the UK's North Sea resources. A report written by the Scottish Office economist Gavin McCrone for ministers in the mid-1970s indicated that with ownership of North Sea oil, an independent Scotland would have "embarrassingly" large tax surpluses. [cite web|url=http://www.oilofscotland.org/mccronereport.pdf|format=PDF|title=The Economics of Nationalism Re-examined|last=McCrone|first=RGL|date=1975-04-23| accessdate=2008-07-17] ["BBC news online September 2005" [http://news.bbc.co.uk/1/hi/scotland/4238744.stm Papers reveal oil fears over the SNP] ] The report also stated that the economy of an independent Scotland, with control over the majority of UK North Sea oil revenue, would have one of the "hardest" currencies in Europe and that "for the first time since the Act Of Union was passed, it can now be credibly argued that Scotland's economic advantage lies in its repeal." ["BBC News online October 2005" [http://news.bbc.co.uk/1/hi/scotland/4303750.stm Secret oil finds dossier released] ] ["Scotland on Sunday", January 1, 2006 [http://scotlandonsunday.scotsman.com/business.cfm?id=392006 How North Sea oil calmed the UK's crisis ridden waters] ] [BBC Radio 4 Documentary programme Jan 30th 2006 http://northseaoil.tk/]

Notes and references

*Murkens, J, Jones, P & Keating, M (2002) "Scottish independence - A Practical Guide". Edinburgh University Press. Edinburgh.
*Kemp, A.G & Stephen, L (1999) "Expenditures and Revenues from the UKCS - Estimating the hypothetical Scottish Shares 1970-2003" North Sea Study Occasional Paper No. 70. Department of Economics. University of Aberdeen.
*Wälde, T. Thomas W. Wälde Scotland’s Oil Does it have a future?, published oinline at http://www.dundee.ac.uk/cepmlp/journal/html/Vol14/Vol14_5.pdf, accessed September 20 2007.

ee also

*Economy of Scotland
*History of the Scottish National Party
*North Sea oil

External links

* [http://www.ejil.org/journal/Vol12/No1/120077.pdf Prospective Anglo-Scottish Maritime boundary revisited]
* [http://www.opsi.gov.uk/si/si1999/19991126.htm Full text of the Scottish Adjacent Waters Boundary Order 1999 S.I 1126]
* [http://www.snp.org Scottish National Party]
* [http://www.ukooa.co.uk/ UK Offshore Operators Association]