Meeting of the Parliament 14 January 2016
I will cover a couple of areas on which the committee took evidence. My colleague John Mason dissented on areas in the report about forecasting, on which he holds very strong views. Committee members know that I expressed a number of reservations, but without going as far as dissenting. I will touch on those reservations.
I am always interested in the world according to Jackie Baillie. She again held up the OBR as an example of an organisation to which we should aspire. She spoke of lack of Government intervention and she spoke about oil forecasts. I want to speak about a letter that the OBR sent to the committee in July 2014. It said:
“Our medium term forecast for oil and gas production is based on projections by the Department of Energy and Climate Change”.
That strikes me as the OBR relying on Government projections and forecasting to facilitate its work.
We were told that the Scottish Government’s prediction of an oil price of $113 per barrel was some kind of outlier, in terms of the international projections of oil price. The OBR’s letter said:
“In our central scenario oil prices rise from $102 a barrel in 2015 to $160 a barrel in 2040. Under the EIA ‘high price’ scenario shown above, oil prices rise from $138 a barrel in 2015 to $350 a barrel in 2040, delivering £71.8 billion more revenue than our central projection. Under the EIA ‘low price’ scenario, oil prices drop to $77 a barrel in 2015”.
The idea that the Scottish Government was way out in left field in its oil price projections and that there was a range of soothsayers who had correctly predicted what was going to happen with the oil price simply does not bear scrutiny in any way, shape or form.