Stacy Summary: Why don’t the Brits just grow some more? All kidding aside . . . for the past 4 years on Resonance, Max and I have been pointing out that oil has played a much bigger role in UK economy than its finance sector.
The result is that while we are apt to attribute the sudden spurt in Britain’s prosperity in the mid- to late-1980s to a deregulated and reinvigorated City, it owed far more to the massive windfall from the North Sea. Take a look at the numbers. In 1979, when Margaret Thatcher came to power, the amount Britain owed, as a nation, was £88.6 billion. In the subsequent six years, taxes from the North Sea (which had been pretty much non-existent previously) generated an incredible £52.4 billion.
And this:
The second issue is that since the oil arrived, we have treated it not as a luxury but as a staple of economic life. Unlike the Norwegians, who diverted a slice of their North Sea revenues into an investment fund designed to provide for them when the oil started to run dry, chancellors of every political hue treated North Sea taxes as current income.
This was a mistake. Norway’s prudence has helped it withstand this crisis and establish itself as the Switzerland of the 21st century. Even worse, treating the oil money as a permanent asset rather than a temporary benefit has left us ill-prepared for its decline. But declining it is.
So serious is this problem that some are inclined to see it in apocalyptic terms: Jim Rogers, a renowned investor, has predicted that the demise of the North Sea will send the pound crashing downwards, taking the UK into banana-republic territory. It is not hard to see what he means. This year, the Government’s revenues from oil will almost halve, partly due to lower oil prices, partly to the inexorable decline in activity as old fields become exhausted.
Tags: north sea oil22 Comments
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More Craig Murray http://www.youtube.com/watch?v=LF9spgagSHI
This are going bad in the Ukraine:
http://theflucase.com/index.php?option=com_content&view=article&id=1609%3Amartial-law-in-the-ukraine-president-announces-arrests-of-opponents-of-forced-vaccination-and-quarantines-who-carries-out-coup-d-etat-under-pandemic-emergency-pretext&catid=41%3Ahighlighted-news&Itemid=105&lang=en
Zombie Banks, The Game Has Changed
…Something profound just happened to the way the Federal Reserve (Treasury et al) and the Bank of England are going to distribute national debt. What better place to but debt but a bullied domestic bank. Eventually the Federal Reserve/Treasury/Executive bank will force all domestic savings into zero return Treasury instruments. This is the only place where debt can be placed at this time….
http://www.youtube.com/watch?v=JtnWdgs3i-A&feature=sub
Buffet should have bought a railroad in Britain. Thanks for the article really sheds some light on the bleak outlook. Norway really planned for the future gotta give them props
Doesn’t UK has arms industry to support its economy like US , because guns especially Colt has proven to be better hedge against inflation than gold atleast that is what this article says
“The gun that beat inflation Commentary: How the Colt Peacemaker outshone gold”
http://www.marketwatch.com/story/how-the-colt-peacemaker-outshone-gold-2009-11-05?link=kiosk
It’s easy for a post empire nation to survive after downfall, perhaps even create a nice country for it’s people to live in.
It does however require that the mind set of being a respected or feared world power change to one of being a smaller ‘nicer’ nation without delusions of power.
I wonder if, when India is a gold owning super power it will remind the British the shitstorm it left India/east and west Pakistan* (insert preferred part of former British empire here) in. Or whether we’ll give a damn when ‘free economic zones’ are created here to make cheaper goods for the Chinese.
Epic Fail
Goldman Sachs got access to the Swine Flu Vaccine before anybody else. Wow, what a surprise. It gets harder everyday to assume their innocence.
Goldman-Sachs is just the local planetary offices of satan himself
@Stacy/Max, If you don’t hear this too often… keep up the good work! I wish i could come around and buy you guys a round of whatever you wanted in the coffeeshop or whatever and have a chit-chat.. there aint too many of the type that define the goodness you possess
Ireland, because of its geographic location on the edge of Europe, is fucked in relation to oil imports if Britain bombs.
And of course, we handed our oil and gas off the west coast to Shell… you see what I’m dealing with.
Well, I wouldn’t bother you nice folks given how much better informed you all seem to be – I can only read in awe at many of the posts.
NEWS: I had my first radio interview on economics or anything. I’m a Keiserling..
I was really nervous but I think I managed to spread the good word to the people of Spain!
I’ve uploaded the interview on my new blog for anyone who might be interested. It’s long and windy..
http://scotlandunspun.blogspot.com/
Thanks to all you lot and your links. Keep ‘em comin..
The Dutch have natural gas and have been ATMing this since the first discovery in 1960′s
No real decline as the Brits and am wondering why.
Shoulda invested in gold.
@Photoception…maybe their batch was tainted?
It was Scotland’s oil.
SCOTLAND’S OIL!!!!!!
Point is Scotland would have created a much fairer, egalitarian society with all that dosh. That’s the vibe up here. We don’t kowtow like the monarchist f**ks in Westminster and in the English press.
And I ain’t no nationalist.
… And the Bank of England prints more money:
http://tinyurl.com/yffd7o9
Max
I been thinking about the UK £ today & why it didn’t “TOB”. I come to the conclusion that other forces are keeping it afloat. Possibly central banks but I suspect there is another reason.
If “They” allowed the £ to “TOB” then Brown & his government are finished. “They” require a few more favours from him yet…..before he goes to Goldman Sacs. Now we know “They” want carbon taxes & “THEY” need Brown @ Copenhagen to sign on the line.
None of this is possible if the Brown government fails, No “They” are supporting the £ till it all signed.
Then look out below!
Cheers
Mike
Most of us in the UK have known all along we were a third-world economy, living on debt and the short-term gift of glorious black, black oil.
We also knew that, if the spot-price rose we could afford to extract the inaccessible stuff, and prolong our ill-deserved comfort.
We knew that one day we would come to earth with a bump and have to support ourselves in a competitive world.
What we didn’t realise (until it was too late) was that the cheap credit brought in to bribe us and delay the inevitible collapse in our standard of living…… was all smoke and mirrors.
Don’t be surprised if everyone with talent, drive or energy ups-sticks and emigrates in the coming decade.
I think Buffet must have been reading Gregor McDonald.
Gregor has been saying, in various ways, that the US is screwed by no more domestic oil and cars/etc which will cost too much for joe american to live in in the post empire world. He has been a proponent of higher density less resource wasting european style for the US using public transport and TRAINS as the only way to balance the cost of America in a post top dog world. Buffet will be rewarded when the gov nationalizes the railways and pays him off, or something like that.
It must be noted that Alberta has set aside a fund from its oil, amounting to about 1 billion CAD per year for the past 20 or so years.
I don’t know if the fund was set up after Alberta had reached peak oil or not — or what relation that had to the national energy policy.
The development of oil and gas in BC and Newfoundland has not necessarily set aside ‘rainy day funds’ for these provinces … but it is my understanding that money is set aside each year but in smaller amounts.
Is Canada prepared for the decline as its final bits of oil and gas are depleted? That is hard to say… The UK may be providing a valuable lesson here, providing that Canada can make its decisions on this in its own sovereign space.
Alberta’s conventional oil peaked years ago. The Leduc field in the 60′s Redwater in the 70′s Zama in the 80′s. Some gas has been found in the last 20 years but the conservation rules have been weakened by the oil lobby so that a new gas field can be drained in 3 years compared to the old rules which mandated 20years of reserves in the ground.
However Alberta is sitting on the world’s largest deposit of dirty oil (Tar Sands) and immense amounts of medium grade coal. Alberta’s rainy day fund isn’t worth the American dollars it is denominated in. Norway has the ideal model, sovereign (state owned oil) smart politicians who saved for the future. Alberta has the wrong model State (province) owned assets but given for free over to multinational oil companies. An oil royalty rate of ~1% which is not even enough to pay for roads let alone pay for pollution repair.
Expect Alberta to be like Appalachia, poor, polluted and, led by dumb hacks.
Alberta has been and will be Americas Oil Bitch for the foreseeable future with compliant politicians and a large American expat population lobby (Bush type republicans) in Alberta. Think Cuba before the revolution. With no auto industry in eastern Canada look for hard times up north.
Ah but there is always farming in Saskatchewan (Canada’s North Dakota only 10 times bigger).
Also Canada has gold and silver.