‘From Energy Voice today: A huge swing in North Sea oil revenues suggests the sector is “alive and well”, an industry chief said. UK Government revenues from oil production climbed to £1.18 billion in 2017-18, from the previous record low of minus £316 million the previous year, new figures from HMRC show.’
Now, a swing from minus £316 million to plus £1.18 billion may seem a lot, even ‘huge’ but it’s not against the background of oil prices soaring from $27.67pb in 2016 to around $80pb today and with $100pb on the cards. See this for evidence:
So even at $80pb how much should the Treasury be taking in? Here’s an adaption of an earlier piece working it out:
Remember the OBR, a George Osborne creation, regularly forecast doom and despair for an independent Scotland back in 2014. These same forecasts were widely and gleefully used by our Unionist media. Here’s how Energy Voice reported the story in March:
‘A new (OBR) report predicts UK oil and gas revenues will be £400million higher every year from now until 2023 – in the latest sign that the North Sea is on the mend. In its fiscal and economic outlook, the Office for Budget Responsibility (OBR) said its revenue forecast had been revised upwards due to higher oil prices, increased production and lower costs. The Oil and Gas Authority recently lifted its long-term forecast [to 2050] for North Sea production by 2.8billion barrels of oil equivalent to 11.7billion barrels.’
They then predict tax revenues of £1 billion for each of the next five years. It was £1.18 billion in 2018, according to HMRC.
Only £1.18 billion? Nuts!
Here’s how I do the sums:
Even if we accept the conservative 11.7 billion barrels to 2050, at $80 per barrel, that equals total revenue of $936 billion! Production costs estimated by the BP chief, last year, to be no more than $15 per barrel equal $175 billion. So that’s $761 billion or £578 billion, in profit, before wages and shared dividends yet the OBR thinks we only get £1 billion in tax revenue per year. Isn’t that a bit low? UK corporation tax at 20% would give us more than £115 billion to 2050 or £3.6 billion per year. What’s going on here?
Finally, there have been new discoveries since then and there will be, no doubt, more in the years to come.
Let’s not throw this away a second time. Westmonster will just use it to cover the costs of Brexit.