Insult a company enough, tax a company enough, inhibit a company’s business enough, and it will go. BP, a pioneer in offshore oil production, has decided to sell its North Sea assets.
From Reuters:
“This decision is another stark reminder that confidence in the UK Continental Shelf has been badly shaken after years of policy uncertainty, punitive taxation and mixed messages about the future of the industry,” said Russell Borthwick, chief of the Aberdeen & Grampian Chamber of Commerce, which comprises many UK oil and gas producers.
Matthew Lynn, writing in The Telegraph:
A windfall tax confiscates any money [BP] might make, it is subject to constant lawfare, and while Andy Burnham has signalled a more pragmatic approach, the Government has until now refused to give it permission to expand its fields.
While rivals such as Norway’s state-owned Equinor deliver bumper profits, driven by increased output in its share of the North Sea, BP faces nothing but restrictions and levies. It is only doing what makes sense for its shareholders, and that means retreating.
Lynn explains that BP’s decision is another part of the legacy of Ed Miliband, the man responsible for accelerating Britain’s catastrophic net-zero Thelma and Louise leap.
To be fair, a major part in BP’s decision to quit the North Sea was the “windfall” tax first launched by Boris Johnson’s Conservatives (at a rate of 25 percent). The Tories increased it significantly, and then Labour raised it still higher and extended it until 2030. Add all the other taxes, and BP pays tax at a rate of 78 percent on its North Sea profits. The company’s CEO explains that it can deploy its capital more efficiently elsewhere. Amazing!
Miliband remains popular in the Labour party, so instead of being consigned to the backbenches, he has been appointed foreign secretary, a role in which he will doubtless find a way to diminish Britain still further.
Meanwhile, industrial energy in Britain is now four times more expensive than in the U.S. and costs twice as much as in France, “despite” all those wind turbines. Andy Burnham, the country’s new prime minister, is promising a housing boom. I hope that there is plenty of straw available to put up the new huts. Other building materials are highly energy-intensive and therefore expensive, and cement production is at a 75-year low.