Crisis hits North Sea oil search

Two articles in the last couple of days highlight the impact the current recession is having on the Oil and Gas industry and how it will impact Aberdeen and the North-East of Scotland in particular. The first in the FT is here and the second in the Herald is here.

As usual at the root of the causes is the way this government has such a short-term view on how to tax the industry and the time it takes them then to react to changes. Labour has consistently managed to ensure that companies regard the North Sea as a risky place to invest because of the ever changing taxes and rules that they apply. This is detrimental to the long term investment decisions that the Oil and Gas companies must make to develop new and modified sources of Oil and Gas and drives them to invest in other areas of the world where the fiscal model is more geared to the long term.

A year ago I had this to say on what Gordon was doing to the Oil industry. It seems that what I was saying then has come to pass quicker than even I expected. I reiterate what I said then

This just goes to show that despite our "Jonah" trying to sell himself as a wonderful Leader and former Chancellor is nothing of the sort. He has dug the UK into a deep hole and now has nothing to extract us from it.

Now, in this difficult period, we see the huge impact that this has on the Industry and its future in the UK. Investments dry up quicker than in other areas as risk is lower. As a result of this the government itself loses, not only just now, when the tax revenues are at their most needed, but also in the future, when we will need to pay off the huge debts that Gordon Brown has burdened the country.

It is worth reflecting on the fact that the FT quotes the fact that about 1 in 8 of the 400,000 jobs in the the Oil and Gas Industry may well go in the next two years, the majority centred around the NE of Scotland. If this does come to pass this will be a disaster for the area which has little other sustainable industries to fall back on. Urgent action by the Government is required, unfortunately, having taken and spent the money in the good times, they have nothing now left to fall back on, which gives rise to a pretty bleak outlook for the future of the industry and the whole area.

FT.com / Companies / Oil & Gas - Crisis hits North Sea oil search