UK taxes oil profits to reduce prices at the gas pump

[KeepItReal]

The UK just announced a 12% tax on North Sea oil profits to fund a reduction in the amount of fuel surcharges UK consumers pay:

"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."

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


Of course the oil companies are talking alot of trash about loss of jobs and investment. But the UK government counters:

"The shock tax raid on North Sea oil and gas producers will have "no significant effect" on their future investment and production, the head of the Office for Budget Responsibility said.

Robert Chote, who chairs the independent tax and spending watchdog, said the assumption was built into its forecasts, directly contracting industry complaints that the move will leave fields underdeveloped.

"We're assuming that there's no significant effect on the investment and production profile," Mr Chote told MPs on the Treasury Committee.
Centrica, the owner of British Gas and a significant North Sea producer, has complained that the Budget's 12 percentage point increase in the tax rate on the profits of North Sea producers will stifle investment."

http://www.telegraph.co.uk/finance/economics/8414853/Tax-rise-wont-hurt-North-Sea-says-OBR.html


p.s.
If oil prices and profits fall, so will the tax on oil producers. The surcharges would then be reinstated, so the government loses no money.

[freshwest]

1. But.. "It can't happen here!" In the USA.

[Donnachaidh]

2. we'll get the *they'll just pass it along to the customers* mantra here

Fearmongering at it's lowest...

[dipsydoodle]

3. Govenment don't lose

but consumers again in the meanwhile.

However - as could be expected the oil companies have reacted :

Statoil halts North Sea oil projects
One of the world's biggest oil companies, Norway's Statoil, has halted work on two North Sea projects because of the huge tax hit on oil fields in the Budget.

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/8414834/Statoil-halts-North-Sea-oil-projects.html

[ikri]

4. Utterly worthless

Petrol (gasoline) is about £1.39 per litre at the moment, that's about £5.22 per gallon which works out to around $8.39. The price of petrol has risen from about £1 per litre 2 years ago to the current level & they've helped the British motorists by cutting 1p off the price of a litre (many petrol stations put the prices up by 1p on the day of the budget only to take it off again the next day so they lost nothing).

Yes, they cut prices but the cut hasn't made any impact whatsoever on the price of fuel. It was a gesture, nothing more.