Europe’s busiest heliport, which ferries offshore oil workers between north-east Scotland and North Sea rigs, is normally one of the most active parts of Aberdeen. But the oil industry’s two-year slump and thousands of job losses mean some residents say the food banks are the now the busiest place in the “energy capital of Europe”.

The oil price crash – from more than $100 a barrel when the Scottish independence referendum was held in 2014 to as low as $27 last year – has been tough on the Granite City.

“Absolutely Aberdeen has been through the wringer, you can see it – shops, restaurants and pubs closing, people out of jobs,” says Deirdre Michie, chief executive of Oil & Gas UK.

The trade body’s figures show numbers employed by the industry in the UK fell from 453,800 to 330,400 between 2014 and 2016. Scotland makes up 38% of the total workforce, and unemployment rates in Aberdeen went up by a quarter during the slump.

Michie says the key positive difference between the last referendum and Nicola Sturgeon’s “indyref2”, being voted on this week in Holyrood, is that oil companies have slashed costs. “We’re more competitive, so as an industry, we’re in a better place,” says Michie, who speaks of a “cautious optimism” as oil prices have crept up to about $52 since major oil countries announced production curbs last December.

Lower operating costs will be crucial if Scotland is to recover the UK’s remaining oil and gas, of which it holds 88%, according to analysts. In 2014, then-Scottish National Party leader Alex Salmond put those hydrocarbons at the heart of his economic and fiscal case for independence. He claimed there was 24bn barrels of oil equivalent (boe) to be exploited, worth £1.5tn to Scotland.

Forecasts today suggest much less oil will be recovered, potentially undermining the financial case for independence. Oil analyst Wood Mackenzie says reserves have been downgraded partly because some fields have ceased production in the face of a lower oil price.

Professor Alexander Kemp, an oil economist at the University of Aberdeen, says his research shows that with a $60 oil price, Scotland could produce around 11bn boe of reserves between now and 2050, leaving up to 7bn boe unused.

“The challenge for the industry is to devise new technologies to make those [remaining reserves] economic, to make it up closer to the 20bn boe that some people talk about. At the moment, we’re not going to make it,” he says.

Even with the oil price edging up in the past few months, unions say the modest oil industry recovery talked of globally is not being felt yet in Aberdeen. “It’s not being seen on the ground at all; people are working under the ever-present threat of redundancies and pay cuts. I’m representing a couple of guys today who are appealing against redundancies,” says Jake Molloy, regional organiser for the RMT.

In a city so dependent on the oil industry, the knock-on effects are widespread on the businesses that rely on it. Taxi drivers report trade halved in 2016; one says his usual 30-a-week trips to the airport, at £20 each way, are down to five as a result of a lack of oil workers.

“It’s just gradually falling to bits,” says Pete Morton, a barista at a coffee chain in the town centre. There are several empty shops and at least eight bookies up and down the length of Union Street, though locals are split on whether that’s down to the oil crash or a reflection of wider retail changes seen elsewhere, too. Property prices are down, and there are stories of laid-off oil workers who can no longer afford big mortgages, but equally don’t want to sell in a falling market.

A straw poll suggests many here think the economic argument for independence is shot because of what’s happened to the oil price. “I think it affects it big-time,” says retiree Phyllis Thomson.

Campbell Monro, an electrician and former offshore contractor, says on the financial case for independence: “It’s worse now.”

Others disagree. “We’ve got a lot more to offer than just oil. I get Aberdeen is quite heavily based on that, but I don’t think we just need to rely on that,” says local resident Hannah Wilson.

Facebook Twitter Pinterest Scotland’s first minister Nicola Sturgeon is lobbying for a second referendum – and Aberdeen may vote yes this time. Photograph: Murdo Macleod/The Observer

Jim Gifford, a Scottish Conservative councillor and former leader of Aberdeenshire county council, says: “Businesses were just getting past the first referendum and then came the oil crash: it was catastrophic. A second referendum is the worst possible thing. It’s the uncertainty – businesses don’t like uncertainty.”

At the town hall, where the barometer outside points to “change” and the Queen’s portrait hangs in the lobby inside, city council leader Jenny Laing says Aberdeen has experienced downturns before but “nothing on this scale”, and that the prospect of another referendum is disastrous.

“I was a campaigner for remaining [in 2014] because I didn’t believe, even with the oil price at the height it was, that it was sensible economics to base the whole of your future on that one industry; we’d seen the peaks and troughs before. Since the oil slump, I think it’s clear those arguments were not sound,” says the Scottish Labour councillor.

Callum McCaig – the SNP MP who drew laughter from colleagues and a stony face from Theresa May at PMQs last week when he asked if the UK could afford to be an independent country given its debt – rejected the idea that the fiscal and economic case no longer adds up.

“If we were a petrol state and our only economic activity dropped in value by 75%, we would have had an enormous recession, and we have not. The Scottish economy is not dependent on oil and gas,” says the member for Aberdeen South. He argues that if Scotland had been independent during 2014-16, it would have handled the oil crisis better for the city.

“Compare the urgency with which ministers dealt with the steel crisis, or the haste with which Greg Clark went to France to discuss the future of Vauxhall, and compare that with the utter complacency in supporting our oil and gas industry,” he says.

Of the lower oil price’s impact on another bid for independence, he admits “I don’t think it helps” but says the way the slump was mishandled in Aberdeen by Westminster will help win over waverers (the city voted No last time).

McCaig laughed at those who say even talk of another referendum is bringing more uncertainty and risks hurting the oil industry. Pointing to Brexit secretary David Davis telling MPs that the government has not assessed the impact of leaving the EU without a deal, he says: “You have complete uncertainty already. You cannot have more uncertainty.”

AFTER OIL: THE ECONOMIC OPTIONS

The North Sea oil industry has been a cash cow for the UK Treasury since the early 1980s. Now that it is largely spent, both as a reservoir of flammable carbon and as a source of tax revenues, an independent Scotland would need to look elsewhere for growth.

In the years since the oil price collapsed and the industry went into decline, Scotland’s GDP growth has flatlined. In that time the UK’s GDP growth has outstripped that of most of the developed world.

That’s a blow to Holyrood, which is struggling with a budget deficit nearing 10% before Nicola Sturgeon even thinks about the implications of leaving the UK.

Such is the decline in oil revenues that whisky is now the country’s biggest export, pushing professional services – much of them linked to Edinburgh’s finance industry – into second place; oil is third and mining and quarrying fourth.

Many SNP officials still look to Ireland as a role model: Dublin as a low-tax financial centre, Cork as a hi-tech hub and agriculture as the bedrock. But the Irish government is nervous about Brexit for the same reasons Scotland should be. Britain is the biggest destination for its exports, and the prospect of tariffs could persuade several industries to decamp almost entirely to the rest of the UK.

Facebook Twitter Pinterest Standard Life’s HQ in Edinburgh Photograph: Andy Buchanan/AFP/Getty Images

Particularly at risk is the Scottish financial services industry, which does most of its business south of the border. Standard Life, which is about to merge with rival Aberdeen Asset Management to create an investment behemoth, said during the last referendum that it would probably move south, if only to continue as a dominant player in the UK pensions market. Royal Bank of Scotland and Lloyds are in a similar position.

There is the prospect of European Union membership after Brexit, but that will be blocked for as long as Scotland’s budget deficit is above 3%. So even if the Spanish, concerned about a good deal for Scotland encouraging Catalonia to split, agree to swap the UK for Scotland, it could be years before the EU27 becomes 28 again.

Holyrood could try to gain access to the single market by joining Norway, Switzerland, Iceland and Liechtenstein in the European Free Trade Area. This requires a fee, which could be waived, and free movement of labour, which Holyrood favours. Efta would mean tariff-free access for Scottish exporters, which would support agriculture and fishing and could encourage English or Welsh firms that rely on EU access and are considering a shift to Ireland to shift their businesses north. At the moment, exports to the EU are small (just 16%) compared with the UK and US.

There is a future away from oil. Scottish energy producers, many investing heavily in renewables, are increasingly selling electricity south of the border. But the transition will be painful.

Phillip Inman