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Tuesday, July 08, 2014

USA Criticises UK Oil Tax

The US Energy Department has robustly criticised the UK's tax increases on petroleum exploration.

Washington said the increase in Britain’s petroleum revenue tax to 81% of profits for old fields and 62% for newer ventures pushed through in 2011, along with other penalties and a cap on relief for winding down old fields, have choked North Sea exploration and paralysed a string of major projects.

The Energy Information Administration (EIA) is quoted in the Telegraph:
As a result of the significant increases in taxes, the UK Continental Shelf [UKCS] projects have become even less competitive.
Increases in operating costs coupled with higher taxes have resulted in decreased investment in both brownfields and new exploration. Even without the increased taxes, operating costs in the UKCS were prohibitively high, exacerbated by the high decommissioning costs of old facilities.”
'Twas ever thus, governments short of cash rarely cut expenditure; instead they increase taxes.

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