Refuting "Dr Wilkie"

I admit I do enjoy tweaking the tails of CyberNats, and I was delighted to cause a new eruption on Sunday from "Dr" "James Wilkie" of "Vienna", who is one of the leading lights of the nutty historicist wing of Scottish nationalism. He has been connected with both the delusional / hoaxer "Scotland-UN Committee" and the risible "Scottish Enterprise Party", although the SNP don't seem to want to have much to do with him, for obvious reasons.

The topic, incredibly enough, was the ownership of Berwick. Again.

Anyway, since this is the best he is able to do, I am going to indulge myself by knocking down all his little straw men one after the other.

"#314 sm753: The facts on Berwick are these:

1. The English occupation of Berwick was military aggression with no constitutional force, and furthermore was in violation of the previous treaty establishing the border at the River Tweed.

2. The subsequent compromise of leaving Berwick under English administration while remaining part of Scotland did not alter the Tweed border.

3. Berwick remained de jure subject to Scots law until 1746, 39 years after the Union."

Hey! So far we're in agreement.

"4. The 1746 act imposing English law on Berwick was a panic measure in reaction to the 1745/46 Jacobite scare (like banning tartan and bagpipes) and was later repealed."

"Panic measure" or not, it was law. And it wasn't repealed until the Interpretation Act 1978 (see below).

"5. English law did not apply in Berwick at the time of the Union in 1707."

Yes yes, we've done this. Although we have to note that Article XXV of the English version of the Act of Union makes an explicit reference to Berwick being included in the remit of the Church of England. There is no corresponding counter-claim in the Scottish version.

"6. The Tweed border was accepted by the UK government up to 1999, and the marine border was officially fixed as running due east from the Tweed."

The UK did not define any internal marine boundaries until the Continental Shelf (Jurisdiction) Order 1968, which set a line at 55deg50min North.

A quick check on Google Earth shows the mouth of the Tweed at just south of 55deg46min North.

Oh dear, Doc. Bonggg!

"7. This was confirmed and archived by the 1968 UK submission to the United Nations on the law of the sea."

There was no "submission to the UN" in 1968. The only 1968 document which exists is the Order mentioned above - a piece of internal UK secondary legislation. It is on display at the UN's website because it also gives UK legislative effect to the true international boundaries which were agreed by treaty between the UK and Germany, Netherlands, Belgium, Norway etc.

The 1968 order, by the way, is no longer on the statute book. It was repealed and replaced in 1987, and then there was the 1999 order setting up another boundary for fisheries purposes.

All covered on this blog here and here.

"8. No record exists of Berwick having been formally transferred to England. It never happened. The drafters of several pieces of legislation simply assumed in error that the administrative boundary at Lamberton represented the border."

There are plenty of records. Representation of the People Act 1883 abolished Berwick as a borough constituency and incorporated it into Northumberland. Local Government Act 1888 incorporated it into Northumberland for local government purposes. Local Government (Scotland) 1889 did not include it in Berwickshire. Then for the benefit of any pedants, the Interpretation Act 1978 confirmed that Northumberland was part of England.

(And the same act repealed the Wales and Berwick Act 1746, as there was no further need for it.)

"9. None of this intermediate legislation (including the 1999 Order) is of any relevance to the status of Berwick in the event of Scotland becoming independent.

10. If and when independence happens, the Scotland/England border will be on the line that existed at the moment of union on 1 May 1707, i.e. from the middle of the Solway Firth to the middle of the Tweed estuary - a border that has stood for almost eight centuries until covetous southern eyes focussed on the oil and other resources in Scottish waters."

Bolleaux. Which planet are you on, Doc? You're claiming 300 years of legislation would vanish overnight? In fact the converse is true - merger of two states means that pre-existing treaties between the two states simply become part of domestic legislation, and hence alterable by the Parliament of the merged entity.

As was done.

Now, if you still disagree, go put yourself up as a candidate for any sort of election in Berwick. The SNP have never done so. I wonder why?

(Previously done in more detail here.)

Debunking the mythology of oil, part II

I'd originally intended not to do any more graphs, but I belatedly thought of another one - illustrating "how far along" the North Sea is in terms of how much has been produced so far versus how much might be left.

The idea was to check on the popular quote that we're "about halfway" through the North Sea - that might well be true, if the high end of expectations on ultimate reserves are borne out. Otherwise, we might be about two-thirds of the way through. As before, Norway's position is much better.

I ought to point out that I've been carelessly using the words "North Sea" when I actually mean the "UK Continental Shelf (UKCS)", which includes the bits to the west of Scotland and the Shetlands. The ultimate reserve estimates I've been using include numbers for those areas (as you can see if you use the link given).

Now, why have brought this topic up? I'm certainly not implying that the oil & gas business is not important to Scotland or indeed the UK. And it's about much more than the direct upstream tax revenue, but also the employment, corporation and income tax which arises from all the onshore support business.

The purpose is simply to put some numeric background behind the useless and content-free phrases which are flung around about how long the oil will "last", or spurious comparisons with other countries.

So, some conclusions:

• Comparisons such as "we have as much as Kuwait or Norway" are pointless. Yes, we are currently producing a similar amount to those countries; the difference is that we are on the way down and they have a lot more left. Tough.

• Oil & gas will indeed "last" a long time. 30 years - easy; 50 years - probable; 100 years - possible (albeit a trickle). But we are looking at a declining production profile; no-one, but no-one, thinks we are going to return to the production levels of the past.

• There will, no doubt, be Nat howls that "the companies understate the prospects to reduce tax, and the UK Govt understates the prospects to dish the SNP". No, they don't. A few years back Shell was clobbered in the markets for over-stating its reserves, and the UK Government has an incentive to over-state reserves to bolster its credit ratings. It balances out. The official estimates are a true best guess, which is why they are in the format of a range.

• So what about the future revenues? As the charts make clear, these depend heavily on the level of world oil prices, which nobody can sensibly predict. But it's also clear that any upwards move in oil price would be fighting against the downwards gravitational pull of declining production volumes. So it seems that for the foreseeable future tax revenues will start at around £10bn plus or minus £3bn, gradually sliding downwards as production does.

• And as we know from GERS, that level of oil tax revenue would only serve to keep the Scottish budget deficit to manageable levels, with perhaps the odd small surplus in good years (e.g. 2008/9).

• That means there won't be any "oil fund". As an "independent" Scotland would be inheriting its per capita share of the (sadly) vast UK national debt, and revenue levels would only be enough to support a manageably small deficit in most years, the odd surplus in good years would go towards paying off debt, not setting up any sort of fund.

• It could be argued that taxation levels could be increased. Thing is, the oil industry already says UK taxes are too high, and are choking off investment. So raising taxation further could well have the effect of reducing revenue for the medium and long term, and causing production to decay still further.

• Another Nat shibboleth is the idea of introducing a "depletion policy" - capping short-term production to eke out the reserves for longer. Norway has one. But as we have established previously, Norway has a lot more reserves than we do, and their production isn't declining as fast as ours is.

• And of course if we did have a depletion policy capping production at less than the "all-out" levels the companies are now using, then production would be lower. So would tax revenue. So the budget deficit would be higher. So there would be even less chance of any "oil fund".

Concluding, it appears that (as in many other areas) apparently well-intentioned Nat policies on oil fall apart when one looks at the numbers. There isn't enough there. We don't produce enough to ensure a reliable a budget surplus - and in any case we would inherit our share of the horrific UK debt - so there won't be an "oil fund".

Sorry, but that's it.

PS

Since we've just had the "debt forever" budget, I ought to mention the measures it contained "to unlock 2 billion barrels" of additional reserves.

2bn barrels = 280 Mtoe.

Already included in the estimates of ultimate reserves used above.

[BTW, if anyone wants to check the spreadsheets I've used in these posts, I'd be happy to mail them out. Let me know.]

Debunking the mythology of oil, part I

North Sea oil looms large in the debate over the future of Scotland, and correspondingly so in Nationalist mythology.

You see claims thrown around like "We have as much oil as Kuwait!" and "North Sea oil will last another 30 / 50 / 100 (delete as appropriate) years!".

These claims are, of course, so devoid of content as to be absolutely useless for anyone interested in the matter of whether "independence" would be a sensible option for Scotland. What matters is the annual level of production which can be sustained, and the associated levels of tax revenue. How long production will "last" is irrelevant, and comparisons with random foreign countries are spurious.

So I thought I'd fire up the spreadsheet and illustrate the facts and contexts behind the myths, in chart format - "picture telling a thousand words" and all that. The raw data come from the excellent BP Statistical Review for international comparisons, and BERR / DECC (or whatever they're called this week) for UK oil & gas production, and tax revenues.

Let's have a look at the production numbers. I've converted oil and gas production to million tonnes of oil equivalent (Mtoe) and added them together, and plotted the numbers for the UK, Norway, Kuwait, Qatar and the UAE. As we've established before, the geographic share of the UK total was some 83% in 2006-7, rising to just short of 90% in the next few years.


Well, the chart certainly does show that UK production was almost identical to Kuwait's in the last couple of years. Between 1980 and 2000 (with the exception of 1991), the UK was actually the largest oil & gas producer of the group selected. (Note also the dip in Kuwaiti production in 1991, when the Iraqi army came on tour.)

But this is a backward-looking picture. Decisions about "independence" are about the future, and it looks worrying that UK production peaked in 1999 and has since been in a fairly steep decline.

What indications do we have for the future?

We can look at remaining oil & gas reserves. The BP stats allow a comparison of proved combined oil & gas reserves across the UK, Norway and three of the Gulf states.


Oh dear.

While the Arabs all have over 15 billion tonnes of oil equivalent (Bn toe) left and Norway has over 3.5, the UK has only 0.85.

Let's express that another way - the reserves/production (R/P) ratio. Quite simply, you take the reserves number and divide by the most recent annual production.



Again, we get a similar answer. While the Gulf states have ratios of over 100 and Norway's is 18, the UK's is only 6.

That means the UK's proved reserves are only 6 times the 2007 level of production.

Of course, the oil won't really stop in 6 years. On the one hand, production is falling, and on the other hand more reserves will be added to the "proved" category.

So we really need to do a comparison of more than just the "proved" reserves. This isn't really possible for the Gulf states as they simply claim that all of their reserves are proved (although in fact there is a widespread suspicion that their numbers are overstated). However, we can do so using the official estimates for the UK and Norway.

(There are still some data issues here as the two countries use different units and categorise their reserves in different ways. What I have done is to extract the ratios between ultimate total and proved reserves in each case, and apply those to the figures from BP for proved reserves.)


This makes things a little better. Total UK reserves are estimated to be between 2.9 and 5.6 Bn toe. However Norway's reserves are much larger - between 5.2 and 10.7 Bn toe.

R/P ratios show the same story, of course: 20-39 years for the UK, 39-54 for Norway.


The hard facts are that the Norwegians have a lot more oil & gas than we do, however you do the analysis. So it makes the casual comparison between the two, which is often made, largely spurious.

So how does this all translate into a forward-looking view of production and tax revenue?

Well, here is the current official UK forecast, out to 2020 for production and just one year (2009-10) for tax revenue.

I've also done a plot of tax revenue against oil price - again, the final (2009-10) value is the HMG forecast.

I'm going to save most of my conclusions for a future "part II" post, as this one has gone on long enough.

But it's clear that production is in inexorable decline, and that tax revenues - while dependent on the vicissitudes of the oil price - are never again going to hit the bonanza levels of the early 1980s. And since we know (from GERS) that the current levels of oil tax revenue are already being eaten by the current higher-than-the-rest-of-the-UK levels of public spending. 2008/9 might be an exception to that, but we'll see.

Which goes to expose Nat claims that there is some huge hidden "oil surplus" out there which could be used to build up any sort of significant "oil fund" in meaningful time as being fanciful.

More thoughts and conclusions next post.

A Scottish Quisling?

This isn't strictly "mythbusting", but it's my blog and I'll stray off-topic if I feel like it.

I have to thank the justly-renowned Grumpy Spindoctor for bringing to my attention the wartime travails of one Arthur Donaldson, a Nat who later became leader of the SNP in the 60s.

With my interest piqued, I was able to follow the trail to Wikipedia and to a 2005 Sunday Times article.

A quick inspection of the PRO catalogue shows that there is indeed a file entitled:

"HO 45/23801

WAR: Arthur Donaldson, Scottish nationalist extremist engaged in formation of United Scotland Party and Scottish Neutrality League: organiser of National Aid Society to assist conscientious objectors to evade military service by going into hiding; detention under Defence Regulation 18B"

(As well as a similar one dealing with a Mathew Hamilton.)

I periodically go to Kew to look at other (non-political) stuff. I'm planning a trip in the next couple of months. I think I'll have a gander at these files.

Why am I bringing this up?

Pure amusement. CyberNats are notorious for throwing around "Vichy" and "Quisling" as insults.

So isn't it deliciously ironic that one of their own founding fathers was apparently caught entertaining the prospect of becoming, quite literally, the Quisling-like leader of a Vichy-type regime?

Priceless.

Border barminess, part IV - Berwick (coda)

Today the Borough of Berwick-upon-Tweed ceased to exist, as it is now an integral part of the County of Northumberland.

(See previous post.)