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Saturday, February 14, 2015

Crashing Oil Prices Would Have Doomed an Independent Scotland

Last year we warned that although a Yes vote in the election to determine whether Scotland would go free from Great Britain would be a good idea, basing Scottish finances on North Sea oil was a very bad idea. This, in itself, probably swung the No votes into the majority.

As it turned out, an independent Scotland would be looking at a £15.5 billion hole in the national budget. And, it's all due to the price of oil having plummeted.

Our long term forecast for the price of oil is much lower than it is today. We'll probably see it rally back to near $70/bbl before we see the bottom—and it could take several years of trading range moves before the final low. But, anyone who intends to buy oil now and become rich had better look at the black hole Scotland barely missed falling into last year.