If Scotland had an oil fund in 1980 we would have a massive surplus right now?
The concept of the Scottish oil fund if only Scotland had become independent in 1980 (a very important date) is a key supporting argument from many nats.
Let’s leave aside the argument that one would need a time machine to make that proposition work, and there is no evidence at all that the past will be repeated in the future, so we can view the numbers.
The fund would be built assuming Scotland maintained current levels of public spending and revenue as defined by GERS since 1980, but invested any surplus into UK Gilts (way beyond the 4% a year as assumption used by Business for Scotland), where there was a deficit Scotland would simply draw down from the fund.
This means Scotland would have a huge oil fund when it needed it, when say the oil price collapsed this year. So how would that fund be doing now, when we really need it due to the oil price?
Let’s leave aside the argument that one would need a time machine to make that proposition work, and there is no evidence at all that the past will be repeated in the future, so we can view the numbers.
The fund would be built assuming Scotland maintained current levels of public spending and revenue as defined by GERS since 1980, but invested any surplus into UK Gilts (way beyond the 4% a year as assumption used by Business for Scotland), where there was a deficit Scotland would simply draw down from the fund.
This means Scotland would have a huge oil fund when it needed it, when say the oil price collapsed this year. So how would that fund be doing now, when we really need it due to the oil price?
Sourcess:http://www.gov.scot/Resource/0038/00389859.pdf http://www.gla.ac.uk/media/media_319446_en.pdf, http://www.gov.scot/Topics/Statistics/Browse/Economy/GERS/GERS2014xls
There really isn’t much of a point in an oil fund if it’s going to be worthless when you need it most.
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