The No Campaign gets its figures wrong again!

Oil has a great future

Ian Taylor, the No Campaign’s largest donor, wrote an article in The Sunday Herald last week explaining “Why he gave the No Campaign £500,000”.  The donation itself has caused some heated political debate (around the fact that he is not registered to vote in Scotland), but since this site is a professional business and economics online magazine, we will focus on the economic claims Mr Taylor makes.

It is clear that Mr Taylor now has a vested political interest in presenting the worse case scenario, in terms of Scotland’s future oil revenues.  That said, he is also the CEO of Swiss oil trading company Vitol, and so people would tend to believe that he might have an expert grasp of the facts when it comes to quoting oil price forecasts by foreign governments, but the figures he quotes appear to be wrong, and by a good margin.

In his article, Mr Taylor pours scorn on the Scottish Government’s oil revenue forecasts; he writes that in his opinion the Scottish Government’s 2014 oil price projection of $113 per barrel (Brent Crude) is over optimistic – (not an opinion shared by most experts though).

But he then writes:“Norway, so often held up as an example, are planning on an oil price of $77 a barrel in 2014”.

From previous research I knew this wasn’t right, but I like to be 100% sure that the data I reference when discussing the economics of Scotland is rock solid.  So I picked up the phone and asked a representative of the Norwegian Ministry of Petroleum and Energy to confirm the actual figures.

The Real Norwegian Government Forecasts

In the short term the Norwegian Government is forecasting an oil price of  NOK 650.00 this year which (at todays rate of exchange) would amount to $113.55 dollars per barrel and NOK 635.00 or $111 per barrel in 2014.  Those numbers match very closely the Scottish Governments forecast and is $36 and $34.00 a barrel higher than the rate suggested by Mr Taylor.

So how did the No Campaign’s Mr Taylor get his numbers so badly wrong?  

The  figures used in the article appear to be considerably out of date, and may be referencing the Norwegian Government’s previous long term forecast, which was issued in 2009, (at the height of the global economic slowdown).  That out of date forecast, estimated an oil price of NOK 435.00 in the long term (beyond 2040), so roughly $77 per barrel.  The current long term forecast for 2040 and beyond is NOK 525 or at todays rate of exchange $91.72 per barrel.  However that doesn’t even relate to the 2014 forecast referenced by Mr Taylor.

So was he referencing an out of date forecast or just wrong?   Either way he stated a figure for 2014 that is $34.00 less than the current actual Norwegian Government forecast and that level of inaccuracy is just not acceptable in a debate this important.

Norwegian Cautiousness

Norway often undervalues the future oil price in its very cautious oil price projections and then tends to over perform.  This is a luxury they can afford as in 1998 the Norwegian Government decided to set aside increased revenues from the good years to make sure that any future downturns in production or price wouldn’t have a negative effect on the Norwegian economy (a policy supported by the SNP but rejected by the UK Government for more than thirty years).

The Norwegian oil fund worth around $712bn is one of the largest investment funds in the world – known as Norges Bank Investment Management (it is part of Norway’s central bank) – and has just enjoyed its second best ever year last year as rising equity values helped it to a return of 13.4 per cent.  The fund increased in size by NKr504bn in 2012, with NKr276bn coming from set aside oil revenues.

Not Optimistic but Realistic

So is the Scottish Government figure for $113 per barrel optimistic and over priced?

Well it seems to be extremely close the Norwegian Governments cautious figure, but it is worth also noting that the OECD is forecasting a 2017 oil price of $150 per barrel, the UK and USA Governments around $130 per barrel.  Much is made of the OBR forecast of $92 dollars per barrel but the UK Government Energy Department has ignored that as pessimistic and is forecasting $130.00 per barrel.

Add to this the forecasted increase in productivity following record levels of investment in the North Sea and Atlantic fields, (expected to kick in around 2016/17) the lower end estimates would mean Scotland could have a similar net revenue situation as today in its first few years as an independent country.   However if the UK / USA Government forecasts are right, that would mean an oil boom for Scotland that would go a long way to clearing our share of the UK debt and enable us to start our own oil fund and follow Norway’s excellent example.

In terms of the expected increase in oil production, don’t just take my word for it; speaking on Good Morning Scotland, Vince Cable the Business Secretary stated last month:

“I think that in past there’s been a little bit of an assumption that it (North Sea Oil) had been taken for granted. Also a belief that it was declining, and it isn’t declining, it’s got great prospects.”

London based industry body Oil and Gas UK Chief Executive Malcolm Webb said:

“Record investment is forecast this year to search for and produce UK oil and gas reserves. This will be followed by an upturn in production from 2014, sustaining growth across the supply chain and reinforcing the industry’s already significant contribution to the UK economy.”


Even if the lower end price forecasts are correct, I believe that the increase in production will at worst normalise tax revenues at today’s levels and that is pretty much the worst case scenario for the next few years.  Not the best possible, but the “most likely” scenario is that Scotland is set for a new oil boom, or as Vince Cable puts it “it has great prospects”.

The No campaign’s major backer, Ian Taylor, has charged into the Scottish referendum campaign,( in which he doesn’t have a vote), and basically got his numbers completely wrong. Then again, not checking their assumptions against facts, seems to be par for the course for the No campaign.

Further Reading

Oil: boom times ahead? – Herald Scotland

Britain has squandered the golden opportunity that North Sea oil promised  – The Guardian

Up to date Oil pricing data supplied by Norwegian Ministry of Petroleum and Energy

Why I decided to give The No Campaign £500,000 Sunday Herald 

Category: Economics of Independence, Scotland's Economy, Uncategorized

About the Author ()

Gordon MacIntyre-Kemp is the Founder and Chief Executive of Business for Scotland. Before joining Business for Scotland full time first as its MD and then CEO he ran a small social media and sales & marketing consultancy. With a degree in business, marketing and economics, Gordon has worked as an economic development planning professional, and in marketing roles specialising in pricing modelling and promotional evaluation for global companies (including P&G). Gordon benefits (not suffers) from dyslexia, and is a proponent of the emerging New Economics School. Gordon contributes articles to Business for Scotland, The National and The Huffington Post.

Comments (14)

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  1. Iain says:

    Keep going. There can be no objection to honest debate on either side, but the No campaign’s relentless false propaganda must be exposed. You have succeeded in the sector you know best, and it s up to all of us to speak out when we can see the errors as a result of our own work experience.

  2. Ben Dobb says:

    I don’t know if it makes a difference – but surely Mr Taylor was talking about what price the Norwegian Government use to make plans with, not the predicted price by the Norwegian Ministry of Petroleum and Energy. It would be silly to predict a “worst case senario” – because you’ll constantly be wrong. The whole point of prediction is to try and be correct. But it would be silly not to make plans based on a “worse case senario”. Especially if the plans you are making involve the country’s health service, pensions and financial liquidity.

    • Gordon MacIntyre-Kemp says:

      Ben thanks for the comment, I did consider that option, and I even asked the Norwegian Ministry the question “what price are you planning on?” and the answer they gave was, $113 this year and $111.00 next year at current exchange rates.

      For avoidance of doubt, here is the actual quote from the article written, according to the credits in Mr Taylor’s own hand.>

      “Norway, so often held up as an example, are planning on an oil price of $77 a barrel in 2014 compared to the SNP’s ‘cautious’ estimate of $113. Make no mistake – such over-optimistic assumptions would come at a real cost”.

      By comparing $77 directly with $113 he suggests he is comparing like with like.

      By using the phrase “planning on” he is suggesting that Norway are making plans based on an expectation of $77 and not that, somewhere a scenario planning team has worked out a worst case scenario, just in case, but that the Government has rejected it as almost unthinkable, and gone with $113 for this year a $2 rise! By comparing the two prices in the same sentence with the connecting phrase “planning on” he is clearly suggesting “planning on” applies to both prices.

      So, I have suggested he got his figures wrong, your scenario suggests he was deliberately trying to mislead people. Either way he should be called up on it.

      And finally if the Norwegian Government were “planning on” $77.00, we wouldn’t have needed Mr Taylor to tell us, it would have been front page news in Norway and the Scottish Press would have picked up on it like a shot.

      The expected increase in volume of production over the next few years and the predicted (actually genuinely planned on) increase in price for the next few years by most sources including foreign Governments and the OECD. Will mean if Scotland votes Yes, it will have a strong financial start as an independent country.

      • Donald Laing says:

        No answer to that evidence Gordon. Illustrates how important it is that knowledgable people like yourself enter into these debates to counter the nefarious nonsense we are being constantly fed by powerful forces frightened that we may at last come to our senses.

  3. The sheer scale of the propaganda in this is simply breathtaking. Access to the internet and independent media is demonstrating how much we are routinely lied to.

    “Dodgy Oil Speculator gives the campaign backed by all major UK political parties half its funding and then lies about oil prices” just aint a headline we are ever going to see on the BBC.

  4. David Wilson says:

    Thank you Gordon for a well documented article.

    I doubt however that BBC Scotland will be on the phone anytime soon, they seem to have a permanent contract with Mr Doom and Gloom ex- Labour apparatchik, John McLaren.

    It would be great to get this article out to other websites, Newsnet Scotland, Bella Caledonia and Wings over Scotland and increase it’s readership.

    • Gordon MacIntyre-Kemp says:

      Thanks David

      John comes from the glass half full school of economic thought!

      Newsnet will probably publish Monday and Wings Retweeted today several times. As for larger readership, one of our articles “The truth about Scotland oil” had 3k + unique visitors in a day this week and so we are moving servers before promoting the site more fully.

      The site went public only two weeks ago and we have already smashed the monthly traffic target – so watch this space.

  5. Brian Cuthbert says:


    You’ll be interested to know that Wings Over Scotland has picked up on this article – adding to other information and analyses turning up about Ian Taylor and Vitol’s alleged and actual activities (not to mention Mr Taylor’s recent threats of litigation against various blogs and the Herald).

    I believe it’s called the ‘Streisand’ effect.



    • Gordon MacIntyre-Kemp says:

      Thanks Brian, I have noted that Ian Taylor has seemingly started legal action against sites that he believed have unfairly criticised him and that the National Collective site is off air as a result. I understand that the Herald and Wings over Scotland have also been contacted by his lawyers.

      This is why I checked my figures with the Norwegian Government (even though I knew them already) and swapped half a dozen emails seeking detailed clarification of the facts before publishing, I have backed up all my correspondence with them should I need it.

      I research thoroughly all the data I use, this debate is too important to be slapdash, I don’t see why others shouldn’t be held to the same high standards.

      • Iain taylor (not that one) says:

        If you take away the lies, the distortions and the “innocent” inaccuracies, Better Together is left with nothing in the economic argument.

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