Way back in December 2005 I prefaced one of my own favourite blog
posts with the following quote:
ENERGY giant Shell has slashed investment in its future North Sea oil
drilling programmes by a third, blaming the doubling in oil
production taxes announced by Chancellor Gordon Brown in his recent
Rather irritatingly, I didn't keep a link to the original source.
From this, one could quite reasonably conclude that El Gordo cannot be
completely absolved of blame for the current situation in the oil
market. But fear not! From today's Telegraph we read that Laurel and
Hardy have leapt to the
Oil industry leaders are anticipating more North Sea tax relief after
the first signs of a Government U-turn. Modest tax changes were
announced yesterday as the Prime Minister and Chancellor intervened to
try to boost flagging production.
Gordon Brown and Alistair Darling took the unprecedented step of
making a direct appeal to oil industry leaders to increase output and
accelerate developments. They took members of Oil and Gas UK, the
industry trade body, by surprise by asking to join what was planned as
a routine meeting of the organisation near Aberdeen yesterday.
They held out the prospect of regulatory and tax changes to attract
more North Sea investment and provide the incentives to develop new
discoveries which are little more than 'puddles' compared with the
giant Brent and Forties fields.
Well, not quite. As is usual with New Labour, you have to dig a little
Crucially, the tax cut announced yesterday affects only older oil
fields, which are covered by a separate tax regime, and does not
reverse this new windfall tax.
This is hardly surprising. Over the past decades the North Sea has
become one of the Government's biggest corporate tax cows, generating
more than Â£230bn in revenue since 1968. The Treasury is expecting to
make around Â£10bn this year from oil revenues, though experts at
Grant Thornton think this could rise as high as Â£16bn due to higher
However, this windfall has come at a price. If, as thought, it is
responsible for depressing production in recent years, it has helped
make the UK a net oil importer two years earlier than expected.
This is yet another example of Gordon's complete inability to think
through the consequences of his punitive taxation policies. Stupid,
grinning, one-eyed wanker!