End of Iran sanctions bad for independent Scotland?

I told the cab driver in answer to his question that my wife and I had flown from Glasgow via a direct connection at Dublin. He had been to London a few times but never to Scotland. A couple of miles along the Bayshore Freeway as we approached San Francisco's southern boundary he noticed as I looked across a small bay but didn't see what I had expected to.

"Oh, they knocked down Candlestick Park – completed the job a few months back. The 49ers (the city's National Football League team) now play at Levi's Stadium in Santa Clara. You've been here before?"

"A long time ago back in '72," and he told me that he had come to the city as a teenager in the late 70s. It turned out that he was Portuguese, from the north of the country and had actually been born across the border in Spain so spoke Portuguese and Spanish, plus English and French fluently and got by fine in Italian.

Could be a job for him in Brussels, I suggested. Never, he told me. Europe was nice to visit and he still had some relatives there but America was still the land of opportunity where one could work hard and get on. Besides, his family felt no attachment and California was their home.

A few days later and another cab ride, this time from the large house we shared on Corona Heights for our own family reunion, to City Hall, two miles and 15 minutes in reasonably heavy traffic.

Like the first driver, though much younger, early thirties I guessed, this one too loved London, - "...it is so cosmopolitan, just like San Francisco...and what great weather you've been having!" which I informed him, this year had rarely got north of Newcastle,as we lived near Edinburgh!

"How did you vote in your (Independence) Referendum?"

Against, I told him and gave him a brief outline as to why. To my surprise he pressed a little and made the point that Scotland raised more in taxes per head than the UK average and should be quite viable. Agreeing that this is true – apparently it is due to a higher yield on the taxes of sin: tobacco, alcohol and gambling. I didn't tell the driver that but countered that Scotland had a higher welfare spend and ran a bigger budget deficit.

Deficits could be solved with political courage, I was told...and Scotland exported more per head than the UK average. Couldn't disagree with that either. There was however the point that oil exports were by no means the surety that they have been up to now and the oil price can only drop a little more and the North Sea will be at "break even", which no long term business will sustain.

My turn to press a point.

The looming problem – and not only for Scotland but for American shale oil and Canadian tar sands – is Iran. If agreement on Iran's nuclear programme passes both Houses, the moment it does, a fleet of Very Large Crude Carriers (VLCC) will leave Iranian waters with upwards of 40 million barrels of oil, immaterial of the Brent or West Texas bench marks. If Iran were able to send out all its fleet (National Iranian Tanker Company – NITC) that figure could easily double.

Before sanctions were imposed by the West and some other nations, Iran reckoned that it could produce four million barrels of oil per day for the next 100 years on known oil reserves.

Even without such bounty (and I think it would take Iran two or three years to recover to anything like that level) I told our driver, there's between two and three million barrels of oil on the world market looking for a home.

Silent for a moment, he replied: "Yes, I expect the price of gas to drop a dollar per gallon".

Now it was my turn to have a pause for thought.

The American gallon is less than the Imperial but converting the prices for a typical San Francisco gas station one finds the following prices:

Regular: $4.30 about 84 Octane

Midgrade: $4.42 about 90 Octane

Premium: $4.54 95 Octane - UK Unleaded – about $8.20

Diesel: $3.96

This includes the imposition of the second-highest fuel taxes in the United States: Local, State and Federal taxes amount to 79 cents per gallon.

My thought was not simply on the relative cheapness of transportation but the knock-on effect on other factor costs of production and the advantage it should give to America.

And, I'm afraid, the prospects for the North Sea where the operating cost alone, according to the UK Continental Shelf Activity Survey 2015 published earlier this year, is about $29 per barrel. Factoring in exploration and capital costs and Decommissioning Activity, which in 2014 was £1 billion, and parts of the North Sea slide into the red at around $48 for Brent.

My pause for thought ended when the driver said:

"You know, the middle classes in Iran are really suffering. The unemployment rate is as high as 25 per cent."

He continued after a moment:

"They are really talented; intelligent; very well educated; and they speak English. They should come here; we (the United States and California in particular) should invite all those who want to, to come here. We need them and we certainly can make good use of their skills and motivation – this is a great city."

I did not of course have to be told that my driver was Iranian – but he told me anyway.

City Hall was disgorging a few taxis at its broad kerb and our driver wished us all the best. As he pulled in to the sidewalk he turned to me and said: "It should never have happened."

"No," I replied turning to face him. "It should never have happened."

For those too young to know, "It" was the Iran Hostage Crisis when 52 American diplomats and citizens were held hostage for 444 days after a group of "Revolutionary" students seized the American Embassy in Tehran. The Americans were held from 04 November 1979 and not released until 20 January 1981.