Osborne's Black Gold Populism

Nick

"For that matter, it's a shame that oil revenues - a happy bonus, really - have consistently been used as patches for existing running costs and rarely, if ever, been salted away for the future."

Well, in a sense the North Sea oil revenues have been salted away for the future, as they have been used to keep the national debt a couple of hundred billion below what it would have been had they not existed.

Sure, we could have a separate £200bn national oil wealth fund. But then national debt would be £1 trn rather than £800bn.

Commentator

Very true, Alex, but you don't expect any better from a Chancellor who always looks as if he has just had a good lunch in a Pall Mall club; and whose work experience outside politics consists of a summer job as a student at Selfridges? Osborne takes the weight out of the word "lightweight".

normanc

I work in the oil industry so have a vested interest but people seem to be under the misapprehension that even if oil companies do delay 'looking for oil' it will still be there in the ground for future generations to reap the harvest.

This is true but that's not the problem.

The main problem this tax brings is on mature fields, fields where, instead of the oil coming out of the ground like fizzy pop from a shaken bottle as in the good old days, you need to develop more advanced methods, such as gas injection or submersible pumps.

Upgrading old platforms to be able to do this takes tens, sometimes hundreds, of millions and rather than invest that money a lot of the small companies (and the North Sea is mainly small companies now) will simply earmark that investment for elsewhere (Australia, Argentina, Canada, etc.) and allow production to tail away until the platform is no longer viable then decommission.

So, not only do you risk losing out on the upgrade money (the vast majority of which is spent with UK engineering firms) you also run the risk of fields not producing to their potential and being mothballed before they fulfill their potential.

Sir Graphus

I also work in the oil industry, and agree entirely with what normanc says.

I understand that Aberdeen is in turmoil, just about every investment decision subject to review. Jobs will be lost while the money men think.

What with Clegg engaging in a bit of infantile anti-nuclear populism yesterday, it makes me wonder what modern politicians think governing is all about. Is it;
(a) managing newspaper headlines;
(b) running the country properly?

Jonathan Woolf

I'm sure Sir Graphus knows the answer to his question. Perhaps Osborne is trying to demonstrate to the feeble-minded left how penal tax rates destroy economic activity, jobs, wealth and ultimately reduce tax revenues. Perhaps. Surely he isn't a public-school-educated professional politician, privately rich, who has never had or had to have a real job, who governs by focus group, poll, and for tabloid headlines and cheap point-scoring?

Commentator

And remind us what Clegg brings to the energy debate: a second-class degree in sociology; a career built on backscratching and nepotism; and an ability to talk nonsense in several languages at the same time.....usually with a forked tongue.

Baron

I don’t work in the oil industry, but share normanc view, the boy is a disaster, his additional tax on banks stinks as well, something tells me that both the oil companies, the banks, too, will simply find a way of passing it on.