Chart of the Week


Week 10, 2017: Oil Price v.s. Scottish Nationalist Sentiment


Summary: While the decline in price of a barrel of Brent Crude oil has been newsworthy for economists all over the world, it has been scrutinised particularly closely by Scottish Nationalists, as it would prove an important source of income were Scotland to secede. The chart shows an initial loose correlation between oil price and nationalist sentiment in 2014 and H1 2015 but this ends in H2 2015 when nationalist sentiment remains above 40% as oil price plummets. This demonstrates that the desire for Scottish independence is fuelled by other factors. Just after the first independence referendum in September 2014, Brent crude was priced at $87 per barrel but within 3 months, this dropped to under $50. As oil price dropped, opinion polls showed that approximately 10% fewer individuals supported independence. However despite recovering slightly and remaining above $50 for 8 months of 2015, by January 2016 oil price had halved to $26.  Nationalist sentiment on the other hand showed a modest rise to 50%. 

What does the chart show? The orange line shows the dollar price of a barrel of Brent Crude oil at the close of trading each day, measured against the left hand axis. The data is from 16th October 2014 until 6th March 2017. The blue line shows the percentage of individuals polled who would vote ‘yes’ to the question ‘Should Scotland be an independent nation?’ and is measured against the right hand axis. The polls were conducted on behalf of a range of parties from newspapers to think tanks. Although the question is the consistent across all polls shown here, around one fifth of the polls include opinions from those aged 16+, with the remainder polling only those aged 18+. The chart only shows those who are sure they would vote for independence and does not include those who responded ‘don’t know’. 

Why is the chart interesting? Since the low point in January 2016, shortage in global supply has pushed oil price back up to over $50.  However, as prices rise once again, suppliers may be coaxed back into business (particularly shale producers), which could depress prices once more. What is clear is that this has little bearing on support for Scottish independence which spiked following the referendum on Britain leaving the EU in June 2016. In the Brexit vote the Scottish electorate voted to remain with a convincing majority of 62%. Another spike can be seen in September 2016, perhaps linked to the extensive coverage of UK government’s desire to trigger Article 50 without a parliamentary vote which may have galvanized the perception among the Scottish of a democratic deficit in Westminster. In January 2017, Teresa May confirmed that Britain would leave the single market which may have been a driver in the rise in support for Scottish independence that can be seen in Q1 2017. Although tax revenues will undoubtedly suffer from low oil prices, this could be mitigated by the benefit of low energy costs for other Scottish industries. Ultimately it is difficult for voters and economists alike to speculate on how an independent Scottish economy might look not least due to the volatility of oil price, but also as so much would hinge on the outcome of negotiations, including what responsibility Scotland might take for costs such as UK government debt.