I was pleased to read this in the FT:
UK oil and gas producers on Thursday warned Rishi Sunak, the chancellor, that his new windfall tax on their profits could force the cancellation of projects as well as prompt investors to deploy their capital elsewhere.
They might think this a threat.
I think it the evidence we need that tax can play a part in bringing the fossil fuel era to an end when that has to happen if our climate crisis is to be contained.
I suspect Sunak thinks it vital that we find more oil and gas in the North Sea. I don't. He needs to take the oil companies' long undertaxed profits and divert them to investment in renewable energy now in the way these oil companies will never do.
In other words, a little adherence to the message of COP26 might help right now.
There is a silver lining to the windfall tax after all.
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The simple fact is that there is not much oil and gas left under the North Sea. The sponge was squeezed near dry in the great oil and gas boom from the seventies on. What is left is simply miserable dribbles. And the oil companies have been conning the Government with the promise of a restoration of the boom years by promising new wealth from those exhausted oil and gas bearing strata. All that they would actually produce is a miserable dribble, but big profits resulting from the high oil prices prevailing..
A friend of mine worked as an exploration Well logger in the North Sea during the 1970s and 80s. He always maintained that in the UK sector, lax (possibly corrupt) regulation meant that Oil companies only took out the top 30% of Oil and Gas that was most easily exploited and most profitable.
In contrast the Norwegians insisted that Oil Companies had to take at least seventy per cent. Obviously, a better deal for the Norwegian people.
I strongly support the move away from fossil fuels as quickly as possible but in the deliberately opaque world of the Oil industry it would be helpful to know the Truth.
Incidentally, somebody else I know recently tried to find out who owns the the UKs North Sea wind farms. Despite his own best efforts, despite asking City investment firms, despite asking Banks, nobody knows or at least nobody is saying.
That’s actually not true. There is more oil lying untouched off Scotland’s West coast, than has so far been removed since oil was first extracted from the North sea.
Access denied,by the then defence secretary, Michael Heseltine, because of the nuclear subs.
It is irrelevant
Extracting it will be at least as dangerous as those nuclear subs are
I wouldn’t celebrate too much. If we do effectively cease to produce oil from the North Sea our demand will be met from extraction elsewhere.. Saudi, USA or perhaps the politically banished states like Venezuela or Russia if they are ever brought back into the fold. We will be relatively poorer and they richer as a result… i am 99.9999% certain they won’t follow our lead. Still we can live on our moral high ground pedestal.
The environmental lobby need to make inroads into these States. The U.K. in a by comparison is an absolute pushover but because supply is maintained elsewhere the “victory” is a hollow one.
Ah, the ‘we must all go to hell in a handcart because the Saudis won’t give up oil’ argument is rolled out yet again
So what you’d yo prefer, what we do burn up the planet?
That is an SNP fantasy.
From a cynical perspective it’s not surprising these ‘projects’ are under threat really, since the EEROI figures (energy expended to extract the energy) mean that the price of extracting any of the remaining oil from the north sea is going to either be unprofitable for the oil companies, or too high for consumers to bear. I suppose it is expedient for them to try and lobby rishi with these claims but there won’t be any projects forthcoming, at least on the scale to stabilise prices, and investors got burned with the last tranche of fracking so they will be reticent to get stung again and will put their capital ‘elsewhere’. I think this is the real substance behind these claims from the oil industry, and it does make for a rather convenient strawman.
That being said it would be good to see some badly needed investment in to reducing our reliance on fossil fuels going forwards.
There is a very short (closing on 28th June) public consultation on the Windfall Tax bill. https://www.gov.uk/government/consultations/draft-legislation-energy-oil-and-gas-profits-levy-bill
You can either email a response directly, or do so via Greenpeace or 38 Degrees.
https://act.greenpeace.org/page/108344/action/1
https://act.38degrees.org.uk/act/windfall-tax-consultation
I haven’t read the draft bill, just the fact sheet that accompanies it. Apparently there is to be an Investment Allowance of 80% off the new Energy Profits Levy “to provide an immediate incentive for the oil and gas sector to invest in UK extraction.” Are they living on a different planet?
I may try….
The oil giant Chevron didn’t think so.
After exploring the potential for oil off the west coast, it returned highly favourable results.
It was so impressed with what it found, it started work on designing a refinery in Ayrshire……reaching the stage where it began working on blueprints for a refinery in Ayrshire.
However, Heseltine’s announcement stopped any further development on the project.
I discovered this online, during the run up to the 2014 referendum. Strangely though, finding out details of it now are strangely hard to find.
My recollection of the Heseltine intervention is that he was particularly concerned about oil exploration in the Firth of Clyde (the approach waters to the Faslane base), where there were reports of significant test discoveries, which is hardly surprising given the presence of coal workings in Kintyre in the west and, more substantially, from Ayrshire to Fife and the Lothians. The likelihood of offshore oil in waters off Scotland’s west coast was always recognised, but rarely mentioned by UK Governments.