Fighting Over Natural Resources To Balance Your Budget

Some nations and regions are blessed with possessing valuable natural resources like oil or natural gas. This has led to those areas to use the revenue to prop up and balance their budget. In the United Kingdom Scotland is the main production area for oil thanks to the deposits in the North Sea. In America it is Alaska that benefits from this.

Other states such as those that border the Gulf of Mexico do make money off of the various oil and gas leases sold in the past. Alabama for one put the money it earned from the leases in the Eighties into a trust and uses the interest for state spending. Alaska for 2009 projects oil revenue of over $5 billion dollars. This was a fall from the estimate previously of almost $7 billion due to a drop in the price of a barrel of oil. This money supports the state and local budgets as well as being sent to every state resident.

In Scotland there was recently a spat between that partially independent country and the English government over oil and tax revenue. Scottish politicians have proposed splitting the revenue from its production based on their relative sizes rather then the current system of receiving money from the government in the form of a grant. The goal is to move to a system more like Alaska’s and also to receive more funds.

As part of this argument the Scottish Government has put out reports showing that with access to most of the revenue related to the oil production from the North Sea that they would have a surplus. Currently they like the national government are running a large deficit. These figures are disputed by other economists and the U.K.’s government. Of course both sides are going to do this to bolster their arguments to keep as much of the revenue as possible.

In America there has been a push to reopen the Gulf and the East and West Coasts to more drilling. This has been long frozen due to environmental concerns. The states bordering these waters, especially in the South, desire the new drilling for the revenue it will provide. The United States probably could use more domestic oil and gas production to offset the higher prices of imported oil but the political compromise will be hard to reach.

As the Scottish example shows that rich natural resources concentrated in one area may lead to schism within a country as they try to best figure out how to properly divide this money. As there continues to be pressure on all government budgets and funding there will be a continued push to develop domestic sources as part of a way to increase tax revenue.