In Scottish News #3

I read an article from a popular Scottish magazine titled The Scotsman. The article is called "14th year of growth for Scots oil services exports" and can be found HERE.

This article talks about the oil and gas sector in Scotland. There have been 14 years of growth in a row in this industry. The total exports of oil and gas in Scotland equal 8.2 billion pounds. Offshore equipment, construction, and drilling account for almost half of the sales in this sector. The U.S. is the largest importer of Scottish oil and gas making up 2.6 billion pounds of the 8.2 billion. Growth in the Middle East and Africa markets is evident. Fergus Ewing said, "Scotland has established a global reputation within the oil and gas sector... the value of this activity to the economy and exchequer is substantial." The industry supports around 200,000 jobs in Scotland and there are up to 24 billion barrels of oil still to be recovered in the North Sea. David Rennie said, "Latest figure show that our expertise in oil and gas is increasing in demand across the globe, and clearly demonstrate the growing importance international markets have to play in the long-term future of the industry in Scotland... We'll continue to work closely with companies across the oil and gas supply chain to help identify new opportunities for growth at a global level, particularly in our priority markets such as West Africa, the Middle East, Australia, and Brazil."

This article is relevant to the equation for GDP. Gross Domestic Product includes consumption, investment, government spending and net exports (GDP = C + I + G + NX). The exports of oil and gas that have been increasing over the last 14 years also increase net exports. The total amount of oil and gas exported in 2011/12 were 8.2 billion pounds. This is a significant number as the total GDP in Scotland is almost 140 billion pounds. If the oil and gas industry were not as strong as they are now, Scotland could potentially have a 8 billion pound difference in GDP. The U.S. is one of the main importers of Scotland's oil and gas. This means that the net exports for GDP in the U.S. has 2.6 billion pounds of imports from Scotland in this sector, lowering net exports. The oil and gas industry also supports around 200,000 jobs. The employees who earn wages from these jobs us part of these wages to consume. As consumption is part of GDP, this also affects GDP in a positive way for Scotland. The oil and gas industry in Scotland seems to be growing. This will continue to increase GDP by increasing net exports, as well as consumption as more people are needed to work in this sector.

The high levels of oil and gas exports seem to be a very beneficial thing for Scotland. It increases GDP through consumption and net exports. One negative thing about the growing oil and gas industry is that it is not sustainable in the long term. As oil and gas are not renewable resources, eventually they will all be gone. If Scotland depends to heavily on the oil and gas sector, in the future they will be negatively affected when these resources run out. Scotland should look at more environmentally friendly ways of producing energy. From what I have read about Scotland they seem to be looking a lot into new ways of producing energy including wind turbines to generate power. If Scotland can shift to becoming a leader in producing sustainable energy they will find themselves in a more advantages position in the future when fossil fuels are scarce and new energy is highly demanded.