Government Tax Policy Threatens UK Energy Security

Jokester · 2 May 2011 at 07:22

http://www.bbc.co.uk/news/uk-13256597

Oh dear, there will be more of that to follow as well and many companies are starting to shelve investment to go elsewhere in the world.

Ahleckz · 2 May 2011 at 07:37

I wasn't quite sure what George hoped to achieve by raising the tax on the producers, yes it will mean that we can 'afford' a short term cut on Fuel Duty but if the pundits are correct and many companies move production away from Aberdeen and other oil areas in the UK then any fund raising will be quickly obliterated.

I can't help but think it'll be quietly overturned later in this year or at the Budget next year and was more of a political tactic than anything else - However, I haven't noticed the Scottish Conservatives mentioning it in any of their campaigning.

Then again, the bigger players may simply move in and take over where smaller, more marginal companies left.

You involved in the oil/gas sector Jokester?

Jokester · 2 May 2011 at 17:28

Yeah I work in the oil industry (well more the gas industry at the moment). It's the big players like Centrica, ConocoPhillips, Chevron, BP and the like that are the ones that are likely to upsticks and leave.

It's likely to have a dire impact on UK production because if fields like these are abandoned the cost of re-entry means that they will likely never be put back into production if the tax increase is reveresed.

Biohazard · 2 May 2011 at 17:33

I for one welcome it.

The sooner the Scot's realise this is a nonsense the better.

"Respect". My ****, hand right in the North Sea industry once again for a quick plunder.

[TW]Fox · 2 May 2011 at 17:35

What is the tax rate on North Sea production in Norway, where production is coming onstream?

Glaucus · 2 May 2011 at 17:36

Hopefully this will shut some of the let's tax companies and rich to Hell. It achieves nothing and actually destroys parts of the uk economy that is targeted.
Terrible deiscion.

Kemik · 2 May 2011 at 17:36

I have a feeling they were planning on leaving anyway and just blamed it on the tax hike. Can't help though.

Biohazard · 2 May 2011 at 17:38

Kemik said:
I have a feeling they were planning on leaving anyway and just blamed it on the tax hike. Can't help though.

Not at all, the North Sea fields have had significant interest and development and are likely to last decades more.

Tax increases ontop of already high levies are not helping the profitability however.

But sod it all to be frank, the damage needs to be done again before we're going to get rid of this interference.

scorza · 2 May 2011 at 17:38

A bluff if ever there was one.

Edit: just to point out, the link in the OP refers to gas fields in the Irish Sea, not the North Sea.

Biohazard · 2 May 2011 at 17:39

scorza said:
A bluff if ever there was one.

They are making a big bluff out of it then, there have been week on week announcements and meetings in and from the industry since the announcement.

Dolph · 2 May 2011 at 17:39

But what about all the 'tax the rich' and 'tax corporations' rhetoric so often spouted?

Surely it can't be that there are actually some downsides to doing it???

Jokester · 2 May 2011 at 17:41

[TW]Fox;19038007 said:
What is the tax rate on North Sea production in Norway, where production is coming onstream?

I *think* Norway only taxes production once the initial capital cost is met, but then 50% of the profit. The UK system is that it's production itself that's taxed at 32%, so the tax is an actual overhead that has to be met.

Edit:
http://news.scotsman.com/thebudget/Simon-Whiteside-Extra-tax-impact.6739401.jp
Older fields are paying an effective tax rate of 81% in the UK.

Kemik · 2 May 2011 at 17:41

Biohazard said:
Not at all, the North Sea fields have had significant interest and development and are likely to last decades more.

Isn't Morecambe Bay the Irish Sea?

Biohazard · 2 May 2011 at 17:41

Dolph said:
But what about all the 'tax the rich' and 'tax corporations' rhetoric so often spouted?

By who?

Dolph said:
Surely it can't be that there are actually some downsides to doing it???

Of course there are, I've never professed high business rates. Increasing taxation on an already highly levied industry is nothing like tax evasion in other sectors.

But before I forget, haha.

Biohazard · 2 May 2011 at 17:42

Kemik said:
Isn't Morecambe Bay the Irish Sea?

Kemik · 2 May 2011 at 17:45

Biohazard said:

The company is closing three fields in Morecambe Bay for a month of maintenance, and says it might not reopen one of them.

I was referring to the gas field they're not re-opening. Sorry, maybe my original post was phrased wrong. I was just being cynical in saying maybe they had planned on closing that one oil field all along and now was a good time so they could blame it on the tax hike.

Jokester · 2 May 2011 at 17:45

Kemik said:
Isn't Morecambe Bay the Irish Sea?

Yes it's the East Irish Sea.

arknor · 2 May 2011 at 17:53

AcidHell2 said:
Hopefully this will shut some of the let's tax companies and rich to Hell. It achieves nothing and actually destroys parts of the uk economy that is targeted.
Terrible deiscion.

lets tax the poor to hell because they have no choice but to take it.

Glaucus · 2 May 2011 at 17:55

arknor said:
lets tax the poor to hell because they have no choice but to take it.

Has anyone said that?
In fact if you look at any ocuk thread on the matter. Those of us who don't want to tax the rich, also want to give the poor the biggest tax breaks, funny that.

scorza · 2 May 2011 at 17:56

AcidHell2 said:
Has anyone said that?
In fact if you look at any ocuk thread on the matter. Those of us who don't want to tax the rich, also want to give the poor the biggest tax breaks, funny that.

That's why you never read arguments on ocuk to support VAT rises, flat income taxes, poll taxes etc :rolleyes: