Energy - Oil price rise hits tax hopes
The government has dampened oil and gas industry hopes for new tax breaks as its review of the industry’s tax regime comes to an end this week.
Speaking in the Commons last week, financial secretary Barbara Roche pointed firmly to rising oil prices – and made it clear there would be no rush to hand out concessions.
She told MPs: ‘We should take into consideration the current rosier price of oil and not come to any hasty conclusions.’
Chancellor Gordon Brown agreed to a fast-track review of the need for concessions shortly after the Budget when the price of North Sea crude fell slightly below $10 per barrel – regarded as the break-even point.
It is due to end on 23 May, and the current price of oil is around $16.
The industry is seeking concessions to encourage extraction of the maximum amount of oil from current fields and exploration of areas of the deep North-East Atlantic.
Roche was also asked to consider the case for capital gains tax rollover relief, and for measures to encourage innovations such as the recommissioning of platforms, which would have environmental benefits.
But Liberal Democrat Treasury spokesman Malcolm Bruce said ministers should take into account the volatility of the price of oil – with no evidence yet that it will remain above $15 a barrel.
Shadow chief secretary and accountant MP David Heathcoat-Amory said: ‘I have always believed that the government regards North Sea oil as a cash cow.’