Oil Industry Warns Thousands Of Jobs Threatened By Chancellor’s North Sea Oil & Gas Tax
North Sea oil and gas producers have warned that thousands of jobs could be lost as a result of the tax imposed by the Chancellor in the Budget yesterday.
The oil industry said tens of thousands of jobs could be lost in the UK as a result of the tax introduced by the Chancellor yesterday. The tax will help to pay for the cut in fuel duty – also announced in the Budget.
The economics director of Oil and Gas UK, Mike Tholen, said the North Sea oil and gas tax will damage long term energy security.
There are concerns that the oil companies will simply add the tax Mr Osborne has imposed on oil and gas producers on to the price of petrol although the Chancellor said he would watch the price of fuel “like a hawk” to ensure companies don’t pass on the tax to drivers.
Oil and Gas UK said that the tax on the industry would result in job losses and lost production. As a result the UK would have to import even more oil.
Speaking to the BBC Mr Tholen said “What you see is the UK’s reputation as a global player in oil and gas industry falter because of this. Many companies from abroad are looking at whether to invest in the UK, to help us get the new oil and gas reserves out of our waters. What we see is that image yet again shattered because of the tax change”.
He said there was concern that investment in North Sea Oil and Gas would now fall with jobs and technology lost adding “we will undoubtedly see our nation less well off when it comes to energy security in the years ahead”.
The oil and gas industry employs around 500,000 people across the country and Mr Tholen said “there will be tens of thousands of those who will not now have jobs in the future because of this”.
The managing director of Centrica Energy, Mike Hanafin, said the new tax “could have a chilling impact on future investment in the North Sea”. Meanwhile the shadow chancellor, Ed balls, said it was right to cut fuel duty but it may not mean motorists end up paying lower petrol prices because oil companies may increase prices. He said “Can George Osborne guarantee they won’t just push that straight back up at the pumps? No he can not”.
The LibDem Chief Secretary to the Treasury, Danny Alexander said North Sea oil companies were separate from those selling fuel at pumps so pump prices were unlikely to go up. Even the chief executive of Oil and Gas UK, Malcolm Webb said the new tax would not “affect the consumer at the pump at all”.
The Chancellor said the government would introduce what he called a fair fuel duty stabiliser which would be paid for by the supplementary tax on North Sea oil and gas. As Utility Exchange reported yesterday, the Chancellor explained that if the price of oil fell below $75 a barrel or a similar figure, then the fuel duty escalator would be reintroduced and the new oil tax would be reduced too.
It remains to be seen what effect the new oil and gas tax will have on jobs in the industry and if oil companies simply pass the new tax on to motorists through increased pump prices.