Edmund Conway Economics Editor of the Daily Telegraph has a good analysis of how our "Jonah" Brown has landed North Sea Oil in "Choppy Water".
In it he says the following
The Prime Minister cannot be blamed for the fact that Britain's oil production peaked at precisely the wrong time, nor can he really do anything meaningful to the oil price - despite his pledges yesterday. However, the rising price has underlined just how fast the North Sea is declining, and raised questions over
whether Mr Brown's policies have served to accelerate its demise.
He follows this up later on with an analysis of the changing tax regime that our "Jonah" implemented. Initially what looked like a good idea has, as usual, been fiddled with and changed so that now it is just another tax on us. Edmund says
However, the Government is culpable for its management of the tax regime. Some years ago Mr Brown switched the system to a more modern scheme, charging oil companies a supplement to corporation tax for their North Sea profits, but allowing them to offset the investment they poured in.It was a sensible change, designed to encourage companies to spend more on finding new fields. However, in 2005, the Treasury suddenly and unexpectedly raised this supplementary tax rate.
As I
pointed out yesterday it is these sort of changes in the fiscal and tax regimes that cause major problems to Oil and Gas companies that are making large investment decisions based upon the current conditions and likely changes. All businesses are reluctant to invest in a region if they fear its tax policies will change suddenly and without warning. Edmund continues
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 £230bn in revenue since 1968. The Treasury is expecting to make around £10bn this year from oil revenues, though experts at Grant Thornton think this could rise as high as £16bn due to higher oil prices.
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
Note that last sentence
"It has helped make the UK a net oil importer two years earlier than expected". This is a telling statement and shows how much our "Jonah's" short sighted changes have cost the UK and its taxpayers. Edmund then says
Not only does this have serious implications for energy policy, it has pushed the current account deficit sharply higher and contributed to a weaker pound. It has meant that whereas a few years ago Britain was well positioned to benefit from a high oil price, the implications today are far more damaging for the economy.
This just goes to show that despite our "Jonah" trying to sell himself as a wonderful Leader and former Chancellor he is nothing of the sort. He has dug the UK into a deep hole and now has nothing to extract us from it.
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