Eco-Marxists in the UK Labour party want to raid the country’s oil and gas companies for an £11bn tax windfall. A double whammy against corporate greed and global warming. The money, Labour says, will be used to retrain the industry’s 37,000 workers who will help “make the transition to a clean economy”.
Details are sketchy but going after the UK's North Sea oil producers could end up blowing a bigger hole in Britain’s finances than the one it hopes to close. Government receipts from oil and gas have been dwindling for the past decade, to just £1.2bn last year. A combination of declining production and lower oil prices puts that figure at a tenth of what it was in 2008. Labour’s proposed tax would raise more than the past six years of revenues combined.
Taxes on the sector have fallen for another reason: fields that no longer produce economically need decommissioning. Costs could be as high as £70bn over the next 40 years, says Oil & Gas UK. The government needs to work with operators to reduce that bill. Offering tax credits to offset the costs, it might have to cover £24bn of the total liability, according to a report by the National Audit Office. That number could be higher if operators do not play ball.
Current rationale is that keeping older fields producing supports high-income jobs and pushes pricey decommissioning costs as far into the future as possible. If Labour wins the day it could end up pouring the country’s finances down an even bigger borehole.
This Lex Data Points article is one of a series that explores statistics succinctly.
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