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interestrateripoff

Budget 2011: Oil Firms Warn Jobs Will Go After Tax Hike

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http://www.bbc.co.uk/news/business-12844157

Tens of thousands of jobs in the UK will go as a result of a windfall tax on North Sea oil producers announced in the Budget, the industry has warned.

Mike Tholen, economics director of Oil and Gas UK, said the change would also damage long-term energy security.

The £2bn tax will fund a fuel duty cut, after a surge in global oil prices.

Chancellor George Osborne said he would watch fuel prices "like a hawk" to make sure the oil tax was not passed on to drivers.

He said it was "economically smart" to redistribute the money from the oil companies as they saw profits rise as a result of soaring oil prices "into the hands of families".

The surprise move was announced by Mr Osborne in his second Budget on Wednesday.

He increased the supplementary charge on oil and gas production to raise an extra £2bn ($3.3bn) - but said if oil prices fell, the "fuel duty escalator" - which increased fuel tax above inflation - would be reintroduced and the new oil tax would fall.

Brilliant plan here, I know it's VI saying jobs losses but lets assume it's correct rather than spin the unemployment count may go up and more people will claim unemployment benefit. At worse these households will have lower disposable income meaning less cash for spending.

And if the price does fall the Treasury will hoover up the fall in the cost of petrol by putting more tax on it.

Total genius.

Isn't there a US report which shows at some point fuel tax acts a drag on the economy?

So overall the net tax collected from this may be £0?

Edited by interestrateripoff

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In before the standard HPC negativism: isn't this tax applicable ONLY if oil prices stay above a certain figure (75$/barrel)? If that's the case, why would the companies shed jobs when they're making shitloads at 115$ and won't pay the extra if it goes below $75?

Aren't the explorers getting paid on their findings based on what can be exploited from the total life of a certain asset?

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In before the standard HPC negativism: isn't this tax applicable ONLY if oil prices stay above a certain figure (75$/barrel)? If that's the case, why would the companies shed jobs when they're making shitloads at 115$ and won't pay the extra if it goes below $75?

Aren't the explorers getting paid on their findings based on what can be exploited from the total life of a certain asset?

Doesn't matter. It's a Pavlovian response - Whenever a tax of any kind affects a big company, the big company will say 'this will cost jobs'.

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http://uk.finance.yahoo.com/news/Premier-Oil-says-tax-hike-reuters_molt-1975682666.html;_ylt=AlaU9e4r8Jf02WuIbweVbdXSr7FG;_ylu=X3oDMTE4OWNhNXJpBHBvcwM1BHNlYwN5ZmlUb3BTdG9yaWVzBHNsawNwcmVtaWVyb2lsc2E-?x=0

Well Premier Oil says it will have minimal impact.

And also to stress my points on the budget thread last night Premier Oil say "They have 1.1 billion in Tax write ofs to use first and they are paying no cash to the treasury even with the extra tax for years to come."

It is a joke.

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http://uk.finance.yahoo.com/news/Premier-Oil-says-tax-hike-reuters_molt-1975682666.html;_ylt=AlaU9e4r8Jf02WuIbweVbdXSr7FG;_ylu=X3oDMTE4OWNhNXJpBHBvcwM1BHNlYwN5ZmlUb3BTdG9yaWVzBHNsawNwcmVtaWVyb2lsc2E-?x=0

Well Premier Oil says it will have minimal impact.

And also to stress my points on the budget thread last night Premier Oil say "They have 1.1 billion in Tax write ofs to use first and they are paying no cash to the treasury even with the extra tax for years to come."

It is a joke.

The whole budget is hot air.

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Talk about crying wolf. The cost of extraction in the North Sea, last time I checked, was about $60 a barrel, so they would seem to be making HUGE profits whilst the price is high. Being international outfits, I expect they have means of laundering that profit offshore. However, raw production numbers are impossible to hide. Since most of North Sea oil was produced and sold in a cheap oil market, it's only fair to the taxpayer that some of this excess is clawed back.

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Talk about crying wolf. The cost of extraction in the North Sea, last time I checked, was about $60 a barrel, so they would seem to be making HUGE profits whilst the price is high. Being international outfits, I expect they have means of laundering that profit offshore. However, raw production numbers are impossible to hide. Since most of North Sea oil was produced and sold in a cheap oil market, it's only fair to the taxpayer that some of this excess is clawed back.

Sadly this is not the point. The cost of existing production may be $60 however the cost of finding and developing new fields or reworking old fields in the North Sea will be higher. All the 'low hanging fruit' has been 'plucked'.

So with much lower potential returns from the North Sea an E + P company will be more likely to invest in the development of fields in other parts of the world. A double whammy! Lower total tax take and higher oil imports as total domestic production declines.

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Sadly this is not the point. The cost of existing production may be $60 however the cost of finding and developing new fields or reworking old fields in the North Sea will be higher. All the 'low hanging fruit' has been 'plucked'.

So with much lower potential returns from the North Sea an E + P company will be more likely to invest in the development of fields in other parts of the world. A double whammy! Lower total tax take and higher oil imports as total domestic production declines.

Exactly, unlike modern banking,oil exploration involves a lot of risk as well as costs. Drilling often turns up nothing for the money and time spent. Given the fact that the companies often end up with 'dusters' they might think that their expensive rigs would be better employed elsewhere in the world if the returns after tax are too low .

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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