The benefits of North Sea oil

The extent to which North Sea oil has brought benefits to the UK depends both on its direct and indirect effects. In this paper, some measures of the direct benefits are discussed. Recent falls in oil prices and revised expectations regarding their behaviour in the medium term have significantly decreased the present value of these benefits, compared to the position seen only two years ago. The indirect effects of oil revenues are interdependent with issues of general economic policy. The degree to which the economy can benefit depends upon the extent to which the performance of the British economy is susceptible to improvement via government policy. North Sea revenues provide an opportunity for improvement but the extent to which this is realized depends on the reaction of the non-oil economy.