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« A haszelnut in every bite | Main | Hunky dory »
Tuesday
Jan262016

A not-so-cunning plan

Just as the coalbed methane industry in Scotland looked as though it was going to become viable the SNP administration in Holyrood moved with considerable speed to kill it off. Shale gas looks as though it has gone the same way. 

Now, these same bright sparks have decided that the way forward is to set up some "schemes" for the offshore oil and gas industry, while calling on Westminster to deliver taxcuts. None of this will help an industry in which production costs are too high for the current marketplace. 

So to summarise, the SNP's strategy is to throw tidbits to the parts of the Scottish oil and gas industry that are not cost competitive and to close the bits that might just be able to spin a profit.

I have to say, I'm slightly unconvinced that this is going to work.

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Reader Comments (91)

Every time I think of how thick those formations are I'm reminded of other thicknesses.
============

Jan 26, 2016 at 1:59 PM | Unregistered Commenterkim

I am confused ........
Would yee guys prefer to be in Canada's position ?

Of a weakening currency designed to bail out oil sands for export ?
We therefore can logically conclude that the current and increasing function of Canadian activity is export focused rather than consumption .....i.e. its a colony.

The chief problem in the UK is extreme wealth concentration as a result of no national dividend policies.
PS low capital intensive coal mining cannot be made to work in the UK.
Why do you think more capital intensive operations have a chance ?

Jan 26, 2016 at 2:14 PM | Unregistered CommenterThe Dork of Cork

...So to summarise, the SNP's strategy is to throw tidbits to the parts of the Scottish oil and gas industry that are not cost competitive and to close the bits that might just be able to spin a profit....

Er...No, it isn't.

The Scottish strategy (which it shares with the UK and Europe, incidentally) is to respond to the lobbying voices of the Greens, while simultaneously TALKING about all the marvellous things that it MIGHT be going to do in order to quieten contradictory responses.

Nothing will come of any proposed 'schemes' beyond yet more justification for civil servants. ANNOUNCING that you are thinking about doing something is a standard way of taking the heat off ministers. They can then respond to any question about the 'latest power cuts' by saying that they have set up a study group, or have produced a new policy. That way the questioner is rebuffed, the Greens are happy, and the Civil Service gets another 100 jobs...

Jan 26, 2016 at 3:20 PM | Unregistered CommenterDodgy Geezer

THe SNP would never publically admit it , but they must thanking their lucky stars that they did not get independence, for the with the big drop in the price of oil bang want must of their dreams , and even the Scots would sooner of later get tired of 'it's all the fault of the English' as an excuse.

Jan 26, 2016 at 3:28 PM | Unregistered Commenterknr

Yes guys are operating under a false understanding of how the economy works.

That is a increase in production will distribute enough income to facilitate its consumption.

" The fundamental assumption of the orthodox conception is that the production of goods and services automatically distributes sufficient money in the form of incomes to meet the costs and hence prices of goods and services. This state of affairs is sometimes referred to as Say's law (after the 18th century French economist Jean-Baptiste Say): supply creates its own demand, or, in financial terms, the flow of prices is automatically balanced by the flow of effective demand in the form of incomes. On this view, if, in a given period economic period, a certain volume of production is going unsold, it is because people are saving their incomes instead of spending them.

This relatively straightforward explanation of the orthodox understanding of how the economy works should make it fairly simple to understand both the Social Credit diagnosis and its corresponding remedial proposals.

Douglas' great contribution to economics was his discovery that under modern industrialized conditions the basic assumption of economic orthodoxy is false. Say's law does not hold; i.e., the circular flow is NOT characterized by an automatic and endogenous equilibrium. Instead, the flow of consumer prices is greater than the flow of incomes that are distributed in the course of the corresponding production. There is, in other words, a chronic and inherent deficiency of consumer buying power"

Oliver Heydorn 2016.

Jan 26, 2016 at 3:29 PM | Unregistered CommenterThe Dork of Cork

“Only the Chancellor can deliver the competitive tax regime that the sector requires at this moment and following our discussions today, we will continue to make the case to the UK Government for urgent action in the forthcoming Budget to lower the tax burden on the industry, a move that will help to protect jobs and investment."

It's also highly probable that if the onshore gas industry did make a profit then the current incumbents of uk.gov would sting it with ridiculously excessive taxation too.

Jan 26, 2016 at 3:31 PM | Unregistered CommenterJamesG

The SNP are big fans of the Broken Window Fallacy, so they have set about creating their own Industrial Crystallnacht.....

Jan 26, 2016 at 4:07 PM | Unregistered CommenterNCC 1701E

It would seem Sturgeon/SNP are as daft on your side of the pond as Sanders/Dems are on ours. North Sea basin oil production peaked in 2003, the UK portion in 2000. Cutting taxes won't bring it back, only slow the remaining decline. UK North Sea gas production peaked in 2005. UK has to get fracking if you want to stay warm with the lights on. Or, we will be glad to sell you surplus gas as LNG at more than double your current gas costs.

Jan 26, 2016 at 4:12 PM | Unregistered CommenterRud Istvan

Rud Istvan, buying LNG from North American sources must make more economic sense than pelleted woodchips. Only in Green Blob EU rope land, could it make sense to import unwanted American rubbish and burn it.

We do like the chocolate chips, that originated your side of the pond though.

Jan 26, 2016 at 4:33 PM | Unregistered Commentergolf charlie

http://www.barbicanpress.com/the-lying-scotsman/

I prefer this image.

Jan 26, 2016 at 4:37 PM | Unregistered CommenterMessenger

JamesG, you are at it again, blaming everything that has happened, is happening, and may happen on the UK Government.

When will the SNP stop opposing shale gas exploration, and lead the EU, UK etc? It is only failed Green dogma holding back the UK and SNP, at least the SNP have sufficient power to prevent Scotland becoming powerless.

Jan 26, 2016 at 4:40 PM | Unregistered Commentergolf charlie

The Americans in Beulah, North Dakota, gssify coal, which is where the CO2 comes from for the faux CCS project naive people think is going on in Weyburn, Saskatchewan, Canada. Coal gasification has been going on in Britain for a century. With a new side product, CO2, you might wonder why the project is dying. My bet: EU and British Climate change laws.
Not market or economics. The knives of Green lawyers sawing away at the hamstrings of their own Nations.

Jan 26, 2016 at 4:46 PM | Unregistered CommenterDoug Proctor

Uk trade of goods balance with Eu 28. £

Y2011: - 39, 475 billion
Y2014: - 79,627 billion.

Looking at the data in the first 3 quarters of 2015 suggests net good imports in the region of 85 Billion ~ in 2015.
At the same non Eu trade balance deficit has declined by 10 billion from 53 billion to 43 billion between 2011 and 2014.

The EU is a colony of The UK.
Just saying.

Jan 26, 2016 at 4:47 PM | Unregistered CommenterThe Dork of Cork

Is there a firefox addon that would allow you to automatically blank out comments from some of the more dorkish commentators?

Jan 26, 2016 at 4:58 PM | Unregistered CommenterTerryS

' golf charlie

"JamesG, you are at it again, blaming everything that has happened, is happening, and may happen on the UK Government."

What do you think the Wood Report 2014 was about? The incompetence of DECC to the point where it was unfit to manage the oil and gas industry.

Why, in 2011, were major projects in the North sea abandoned and postponed by O&G companies if not for the excessive taxes pplaced on them by Uk government?

Jan 26, 2016 at 5:35 PM | Unregistered Commentersam

I wouldn't be at all surprised to see a u-turn after the May elections. At the moment the SNP are pandering to their green supporters and would prefer not to split their vote.

Also note that it's a "moratorium" on unconventional oil and gas (while they kick the can past the Holyrood elections), not a permanent ban.

www.heraldscotland.com/news
/13785772.SNP_energy_minister_was__on_brink_of_resigning__over_fracking_policy

Apologies I couldn't get that link to convert to a hyperlink and I've broken it after "news" to get it to fit in the text box

Jan 26, 2016 at 5:39 PM | Registered Commenterwoodentop

Sam, why is the SNP opposing fracking? Nobody seems to know.

The UK Government is overrun by Green Blobbies.What is the SNP's logic for its moratorium?

Jan 26, 2016 at 5:52 PM | Unregistered Commentergolf charlie

Anyone else now able to detect Dork's off-topic comments before reaching the end of the first sentence, allowing them to be skipped without further annoyance?

Jan 26, 2016 at 6:16 PM | Unregistered CommenterChilli

"Anyone else now able to detect Dork's off-topic comments before reaching the end of the first sentence, allowing them to be skipped without further annoyance?"
I suspect Dork's problem is that he only has one topic of discourse so no-one listens to him, leaving him no outlet other than posting stuff online that no-one reads.

Jan 26, 2016 at 7:10 PM | Unregistered CommenterGavin

The truth hurts but data hurts even more.

As production has been outsourced (chiefly to the Eu 28 with the German trade balance now - 30billion but other countries such as France and Spain increasing their tradessurplus) there is little need for energy production in the UK.

This data is in Sterling which has strengthened since the 2009 crisis.
Therefore this is not a skewed monetary number.

Jan 26, 2016 at 7:11 PM | Unregistered CommenterThe Dork of Cork

woodentop
You wonder how many more "evidence-based" decisions are going to be needed before Sturgeon develops a backbone and acts for the good of the country instead of in the interests of the Luddite Tendency.
Her idea of leadership is evidently to find out which way the party seems to want to go and then to walk in front of it. Straight off the cliff if she's not very careful.

Jan 26, 2016 at 7:16 PM | Registered CommenterMike Jackson

How she can carry a sign in her hands which signifies the Train of Death because of all the coal it uses is beyond me.

Jan 26, 2016 at 7:16 PM | Unregistered CommenterPaul

Yes. But I read them anyway. No luck so far in terms of enlightenment. All the words are in the dictionary but the arrangement of them is..puzzling.

Jan 26, 2016 at 7:30 PM | Unregistered Commenterrhoda

Neil Wilson says:
Tuesday, January 26, 2016 at 17:26
“The Report estimates that in “2014, there were over 1 million more jobs in Britain than in 2010””

The adult population went up by 1.436 million in the same period. That’s about the employment rate in ratio terms, so the demand/supply pressure has remained roughly the same

Taken from the Billy blog site today (a full employment war economy blog)

People go to the UK because that is where the money is (not resources)
Resources are then directed to the UK from its colonies.

Is this not hard to grasp ?
Its the history of the UK for Christ sake.

English people appear completely ignorant of their history.
Its very puzzling

Have yee heard of the corn laws and their appeal.
Manchester economics ?

What planet are yee guys from ?

Jan 26, 2016 at 7:43 PM | Unregistered CommenterThe Dork of Cork

If Oliver Heydorn did write those words, then his conception of Say's law is hilariously wrong, to the point that I wonder if he actually ever cracked any of the books written by Say.

Say said that when someone wants to consume something, they either produce it themselves or produce something else that the makers of that thing will want.

And thus when goods enter the market, the producer is offering them for sale because he ultimately hopes to get something in exchange that he can consume - for example the guy selling pet rocks wants to put food one the table, buy nice clothes, bed a Hollywood starlet and enjoy a trip to Hawaii and that's why he puts those rocks up for sale.

And that the amount of money in the economy is not very relevant to this calculation, since money is a temporary place to park value.

And Say propounded these rules in grappling with the question of why sometimes people make stuff that people wanted and then discover that people aren't buying like they expected, the very phenomenon that Heydorn is claiming Say said couldn't happen.

Jan 26, 2016 at 7:44 PM | Unregistered Commentertarran

At $30 oil tax cuts are too late. Half the UK North Sea production is under water, cash negative at that price. More than half of the Scottish sector. Cash negative = tax refunds. Add in decommissioning costs, where you can claw back back taxes and the situation is dire from a govt revenue perspective. Decom costs = £30billion or more = govt paying back to the oilcos, for all that tax the oilcos paid at 70% or more for decades. If Scotland was independent, in the current oil price, it would be faced with paying back taxes for an uncertain number of years. Not alot of tax revenue left from the North Sea, good times gone.

Jan 26, 2016 at 7:47 PM | Unregistered Commentermacroom

The jobs function is not to produce (the real goods trade data is striking in this regard and cannot be refuted)

The function of the jobs is to gain the excuse of purchasing power.

Its a sort of euro wide dividend , collected only by the connected in the UK and to a lesser extent in the various euro area colonial administrations.

Almost all euro countries have been pushed into dramatic surplus with respect to the UK.
Ireland is one of the few which remains in physical goods deficit.

Jan 26, 2016 at 7:52 PM | Unregistered CommenterThe Dork of Cork

@Tartan
That is the economics of the medieval market fair.
Of me selling a cow in exchange for other locally produced goods

What I like to call Puck Fair economics.
Its is obviously absurd under present circumstances

Jan 26, 2016 at 8:00 PM | Unregistered CommenterThe Dork of Cork

@TerryS: I like to think that within two or three words of a comment from the Dick from Crick I can hit the page down and get on to more informative ideas.

Jan 26, 2016 at 8:13 PM | Unregistered CommenterHarry Passfield

@TerryS, Jan 26, 2016 at 4:58 PM

Is there a firefox addon that would allow you to automatically blank out comments from some of the more dorkish commentators?

Yes, install Click here: Greasemonkey and write a script.

Please share script when working.

Jan 26, 2016 at 8:13 PM | Registered CommenterPcar

" The real problem lies much deeper than that.

The bank creation and destruction of our money supply means that money does not circulate indefinitely in the economy from producers to consumers and back again. Instead, money is cycling in and out of existence. Money is issued to producers by banks when the former borrow on revolving lines of credit or contract long-term loans, is spent on various production costs, and is eventually returned to producers when, upon selling their goods and services to the public, they re-collect the money that had been issued to consumers in the form of wages, salaries, and dividends. The money that producers receive is then used to repay their bank loans (and is subsequently destroyed) or it is used to restore their stock of working capital (from whence it can only be re-issued against an accompanying volume of new production costs"

Oliver Heydorn Jan 2016.
So since the creation of credit banks in Britain during the 17th century we have been dealing with a very different system of control.

At its heart it is the control of Industrial energy .
Who has control and who does not.

Jan 26, 2016 at 8:16 PM | Unregistered CommenterThe Dork of Cork

Since we are talking about Scotland.

How many of yee likely lads have heard of Henry Dunning Macleod.

Was he the chap that appeared in Highlander or was he famous (in the 19th century ) for describing banking operations in the real world.

https://en.m.wikipedia.org/wiki/Henry_Dunning_Macleod

There can only be one............

Jan 26, 2016 at 8:27 PM | Unregistered CommenterThe Dork of Cork

Pcar, 8:13pm: many thanks will give it a try, hope it works.

Jan 26, 2016 at 8:29 PM | Registered CommenterSalopian

@ macroom

"If Scotland was independent, in the current oil price, it would be faced with paying back taxes for an uncertain number of years. Not alot of tax revenue left from the North Sea, good times gone."

The amount paid would serve to reduce Scotland's proportion of the UK debt.

Jan 26, 2016 at 8:30 PM | Unregistered Commentersam

Folks.
Scotland - like Quebec in Canada - has a large and influential independence movement.
Why would either of them exploit their (vast in the case of Quebec) natural resources at this point while they can much more easily exploit the large transfer payments from the rest of the UK and Canada respectively for as long as they want them?

Meantime they can leave their resources in the ground for future use when they genuinely need them for income.
The fact they can play to the environmental gallery while doing so is just a bonus really.

Jan 26, 2016 at 8:49 PM | Unregistered CommenterJud

@ Jud

Wrong. The Scottish government and the Scottish people, in my opinion, want a flourishing O&G industry to provide employment and help the UK economy. That is why Ms Sturgeon wants tax breaks to encourage exploration. If oil prices rise in 2-3 years as some in the industry expect any fruits of successful exploration might just be ready to come on stream.Our host seems to have overlooked this.

Jan 26, 2016 at 8:56 PM | Unregistered Commentersam

@ sam
The Scottish govt want to tax anyone as much as they can get away with. Tax breaks are too late, there is no money in it. "If oil prices rise......." well if oil prices fall to $20 or less what happens? Who can tell.

As Monsieur Colbert said - the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.

The oil taxation goose is plucked, no feathers left.

Jan 26, 2016 at 9:24 PM | Unregistered Commentermacroom

Its is obviously absurd under present circumstances

Say's observation (what people call his law) is merely that if we seek to consume, we must first produce.

You say that it's absurd under present circumstances,

I say, Mr Dork. This is rather exciting!!! Are you saying I can quit my job and consumer goods will fall into my lap like manna from heaven? I can't wait to tell my kids!

Jan 26, 2016 at 9:27 PM | Unregistered Commentertarran

Wow! Not sure how my last post got so mangled!

Trying again.. :)

Its is obviously absurd under present circumstances

Say's observation (what people call his law) is merely that if we seek to consume, we must first produce.

You say that it's absurd under present circumstances,

I say, Mr Dork. This is rather exciting!!! Are you saying I can quit my job and consumer goods will fall into my lap like manna from heaven? I can't wait to tell my kids!

Jan 26, 2016 at 9:31 PM | Unregistered Commentertarran

Shit for brains sturgeon fish is obviously unaware that the Flying Scotsman burns coal in both versions, steam or electric. In addition, the steam version has cost £10 million for its rebuild, which is twice as much as a new locomotive, the Peppercorn A1 60163, which cost £5 million.

http://www.telegraph.co.uk/news/uknews/road-and-rail-transport/12118666/Flying-Scotsman-return-delayed-due-to-faulty-brakes.html

http://www.a1steam.com/index.php?option=com_content&view=article&id=45&Itemid=54

It's a good example that demonstrates how Scottish pollies are trying to cobble together a solution for themselves that as always, requires large sums of loot from English taxpayers. SFBSF would like to see itself as a transgender Border Reiver, but has the wrong surname.

https://en.wikipedia.org/wiki/Border_Reivers#Border_.27names.27_and_clan_status

Jan 26, 2016 at 9:32 PM | Registered Commenterperry

perry: the irony is that steam coal is no longer mined in the UK. The heritage railway lines have to import it from Poland, despite that fact that there are megatonnes of the stuff still readily available in the South Wales coalfield.

Jan 26, 2016 at 10:09 PM | Registered CommenterSalopian

Scotland has the best opportunity in the UK, and possibly the EU, to kick the Green Blob where it hurts, demonstrate common sense in energy policy, and provide a kick start to the postgreen industrial rerevolution. I really wish they would.

Jan 26, 2016 at 10:42 PM | Unregistered Commentergolf charlie

@Tarran
Of course you are a wage slave .
Never denied this.

But that is merely the hoop you must dive through.
Its a political and social control mechanism .
Its not a requirement for a Industrial production / consumption system to work.

If British subjects stopped working to access purchasing power (in mainly services) it would make the present arrangements far too obvious for most folk.

Jan 26, 2016 at 11:08 PM | Unregistered CommenterThe Dork of Cork

Jan 26, 2016 at 10:09 PM | Registered Commenter Salopian

Don't I know it. My first job was with the National Coal Board from 1962 - 65 & I even get a tiny pension from it.

If you like to collect books? http://www.amazon.co.uk/The-Efficient-Steam-Oliver-Lyle/dp/B0006ARQ7E

Jan 27, 2016 at 12:52 AM | Registered Commenterperry

perry: thanks for the link. Two years ago the Brecon Mountain Railway reported they were having to import coal from eastern Europe, despite better coal being available from a local opencast site, because the DECC would only allow the output from that site going to a power station by rail, and it couldn't allow it to be transported to the BMR by road because of 'environmental issues'.

Jan 27, 2016 at 1:53 AM | Registered CommenterSalopian

"Yes guys are operating under a false understanding of how the economy works. That is a increase in production will distribute enough income to facilitate its consumption..." --The Prince of Dorkness

The runes found in this territory on the map read: "Here there be nonsense."

Jan 27, 2016 at 3:51 AM | Unregistered Commenterjorgekafkazar

"Yes. But I read them anyway. No luck so far in terms of enlightenment. All the words are in the dictionary but the arrangement of them is..puzzling." --rhoda

God love ye, a few pints of Guinness might clarify this impenetrable verbiage marvellously. Well, for an hour or two. Just don't attempt to explain it to anyone not similarly fortified. Don't ask how I know this.

Jan 27, 2016 at 4:27 AM | Unregistered CommenterFather Jack Hackett

The secret of Miss Sturgeon's success is revealed. Look at the picture of her above, holding the nameplate. She has three hands..

JF
BTW, for those puzzled by the weird posts, look up 'word salad'.

Jan 27, 2016 at 7:50 AM | Unregistered CommenterJulian Flood

Dork - tell us more about 'the corn laws and their appeal'!!

Jan 27, 2016 at 8:03 AM | Unregistered CommenterShindig

The SNP "buying" "green" votes, what's new? If the were serious about energy policy in Scotland they would hardly have appointed the technically challenged (or just challenged) Fergus Ewing as minister in charge. Having said that, despite having the vast majority of MSPs and MPs they hardly have a wealth of talent to draw upon. They are a constant embarrassment to many Scots.

Jan 27, 2016 at 8:36 AM | Registered Commentertested

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