James is right to draw attention to the problems arising from the coalition’s decision to hike taxes on oil companies. Perhps halting the fuel duty escalator was worth it but there are always costs associated with this kind of populism. Oil companies, like the banks, are friendless enterprises and so easy targets for tub-thumping or magpie politicians.
Nevertheless, some North Sea oil fields now face marginal rates of 81% while less-maure fields will be taxed at 62%. No wonder Statoil and other companies are reconsidering planned investments in the North Sea. Osborne should understand why. In 2007 he visited Aberdeen and said:
“The Treasury don’t seem to understand that the UK continental shelf [the North Sea oil and gas region] is a mature resource competing for investment in a fiercely competitive global market.
“They don’t recognise that investment in the North Sea cannot be taken for granted when there are potentially more profitable opportunities in West Africa, Mexico or Brazil.
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