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Home | Blog | Why worry about Hugo Chavez Frias, when you have Gordon?

Why worry about Hugo Chavez Frias, when you have Gordon?


Tags Taxes and Spending


"Peak Oil" alarmists often point to the double-digit production declines taking pace in the fields on the UK continental shelf as a harbinger of our inexorable reversion to the pre-industrial primitivism these self-hating Malthusian members of the 'plague-species' so crave.

However, as the appended news article reveals, any drop-off is more a matter of simple economics than of complex geomorphology — not that the insufferable and increasingly fiscally-embarrassed UK Chancellor, Gordon Brown, would grasp the point.


LONDON (AFX) — North Sea oil companies were appalled by the government's move to raise the supplementary corporation tax to 20 pct from 10 pct.

The UK Offshore Operators Association, which represent the country's oil and gas producers, said it was 'shocked' by Chancellor of the Exchequer Gordon Brown's move, which effectively raises the industry's corporation tax to 50 pct from 40 pct.

'I am staggered that the Chancellor, who speaks of the need for stability and long-term investment, should take this action,' Malcolm Webb, UKOOA's chief executive.

'It is almost beyond comprehension that the government has failed to grasp the vulnerability of the industry's future in the UK,' he added.

The tax rise could not come at a 'worse time' when North Sea activity has just recovered since 2002 when it introduced the 10 pct 'punitive' charge.

'At a single stroke, the Treasury has rewritten the industry's future. It will severely undermine business confidence in the UK Continental Shelf. This has been done not once, but twice in the space of just three years and we fear that this time, the North Sea will not be as resilient,' Webb said.

The tax increase will take an extra 6.5 bln stg out of the industry over the next three years when the Treasury has already 'reaped' 11 bln stg in tax revenues from North Sea producers this year, double the amount they paid last year.

'Today's announcement can not have anything other than a seriously corrosive effect on the UK's prospects for long-term investment, the jobs which that investment supports and the level of UK security of supply,' Webb stressed.

Sean Corrigan is the author of 'Money, Macro & Markets' newsletter & Consultant to Hinde Capital.

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