The early 80s boom was followed by a significant drop in revenues over the remaining years of the 20th century, with tax revenues remaining modest until a resurgence in the early 2000s. In more recent years the recovery in government revenue from oil has dwindled due to the sharp decline in world oil prices and an increase in government tax rebates. UK Government revenue from Oil and Gas is now at an all-time low and, in 2015-2016, according to the latest published Oil and Gas figures from the HMRC "Statistics of government revenues from UK Oil and Gas production" [1], the UK Government incurred a net loss of £24m as a result of Petroleum Revenue Tax (PRT) rebates totalling £562m. Note: This differs slightly from the 2015-2016 GERS document as the GERS document includes income from Licenses and from the Emission Trading Scheme (ETS) but the HMRCs publication does not. e.g. in 2015-2016 ,for the UK, License fees were 72m and Estimated income from the ETS was 28m.

The UK Government raises revenue from the Oil and Gas industry from three direct taxes:

Historically, additional revenue was raised from Royalty Payments and the Gas Levy, however these have since been phased out.

There are a few different ways we can look at Scotland’s share of public revenue raised from Oil and Gas taxation. The Scottish Government publishes Oil and Gas Revenue figures under the Scotland National Accounts Programme (SNAP) [2]. This calculates a geographic share of revenues by drawing upon academic research carried out by Professor Alex Kemp and Linda Stephen from the University of Aberdeen. Kemp and Stephen have published extensively on licensing and taxation issues on the UK Continental Shelf, and are considered to be leading experts in UK petroleum economics.

It is worth noting that whenever Scotland's Public Revenue and Expenditure is discussed in the media or by politicians, the geographic share of Oil and Gas revenue is usually cited, as this is the value that is relevant in the context of an independent Scotland.

For 2015, SNAP lists the value of UK production at £25,610m, £17,431m of which is Oil and £6,550m is Gas. Of the total value, the SNAP Oil and Gas publication attributes £21,458m to Scotland – £16,863m of which is Oil and £3,263 which is Gas. This puts Scotland’s geographic share of production at 84% of the UK total – made up of 97% of total oil production and 50% of total gas production in the UK.

It is important to remember that these numbers refer to the total value of production, not profits – this is key as it is not production that is taxable but gross profits. This is of particularly concern with regards to the North Sea due to Oil and Gas becoming increasingly more expensive to extract, although there are continuing technological advancements in this area.

To put these costs into perspective, despite the UK production value of Oil and Gas totalling £25,610m in 2015, operating and capital costs amounted to £22,688m.

The Government Revenue and Expenditure Scotland (GERS) [3] document presents two different methodologies for allocating the public revenue from Oil and Gas to Scotland’s figures – population share of around 8.2% for 2015-2016 of the UK total and geographic share which uses the Kemp/Stephen methodology mentioned above. The latter results in Scotland’s share of revenue, allocated for determining Scotland’s surplus or deficit, at 78.5% for 2015-2016. While the GERS publications only dates as far back as 1989, there are historical statistics going back to 1980. Analysing these numbers, we can conclude that Scotland’s geographic share of Oil and Gas revenues was considerable over the last 30 to 40 years.

While the Oil and Gas sector is currently not generating much in the way of public tax revenue it does, of course, contribute to the economy in other ways such as the contribution made to the UK’s Balance of Trade through its exports.

In 2015 Oil and Gas products were responsible for 4.13% (£21,084m) of all UK exports. This is comparable to other major industries such as Car Manufacturing (5.02%) and Food, Beverages and Tobacco (3.55%). The UK’s main export continues to be Financial Services, which makes up 9.95% of all exports. Total exports for the UK in 2015 were £510,340m.

In the context of Scotland, it is Oil and Gas that essentially tips the balance to turn Scotland from a Net Importer to a Net exporter [4]. For example, according to the Quarterly National Accounts for Scotland (QNAS) for 2015 - published in February 2017 - Scotland's Onshore economy exported £71,866m and imported £83,008m resulting in an onshore trade deficit of £11,412m. Net Oil and Gas exports totalled £12,120m, resulting in a total trade surplus of £2,052m.

The Oil and Gas industry is a major employer in the UK, employing around 34,000 people directly, 151,500 people indirectly and 144,900 induced in 2016 [5]. "Induced" refers to jobs that are estimated to be reliant on the industry such as hotels, catering, taxis etc. Nearly 60% of those directly and indirectly employed are based in England, with most of the remaining 40% based in Scotland – primarily around the Aberdeen area.

For comparison, the UK’s Automotive sector employs 169,000 people directly and 814,000 indirectly [6] and the Financial Services sector employs 2.2 million people UK wide – 150,000 of whom are based in Scotland.