Today, the price of Brent bland passed to the dark side, falling below $50 a barrel though it did cheer up a little later.
Given the now colossal slide from $115 on June 19 and the determination of OPEC to stick to its decision made in November to defend market share, it is hard to know when and where bottom might be reached.
Gradually, it is dawning that this won’t be a short-sharp nasty event.
Rather it will be slow-burn, last at least until the end of the year and has already become thoroughly dangerous for the North Sea, especially the UKCS where costs have been allowed to get grossly out of control and where the London Government still doesn’t grasp the immense strategic value of our offshore oil & gas resource.
Despite the comforting noises made, I am increasingly convinced that the Treasury especially doesn’t understand the enormity of the crisis facing the North Sea and the communities that largely depend upon it for their living. And Aberdeen, a city with an economy that has become very narrow, is clearly at the top of that heap.
There must by now be a deep-seated anger festering within the industry and especially among operators who, let me remind, are currently being subjected to Treasury yet again manipulating its fiscal machinery by cutting a paltry 2% off the Selective Corporation Tax supplementary charge on profits from 32% to 30%.
As if the leadership needed reminding of this, that is only a fraction of the 12 percentage points hike in the supplementary charge imposed in 2011 so that chancellor George Osborne could syphon even more money out of the North Sea, despite its advanced maturity.
If Osborne had been honest then that extra charge should have automatically fallen away when the oil price dropped below $75, which was the original deal.
It seems to be a case of, “Guys we’re in charge and we’ll shift the goal posts as much as we like, so tough!”
The promise from chief secretary Danny Alexander in early December when he launched the Treasury report offering a package of measures designed to help the limping North Sea along was that more cuts could be in the pipeline.
OK Danny, where are they? I understand the inertia of government bit, but why is it taking so goddamned long to make the dramatic decisions that are unquestionably now required PDQ? Darling did it for the banks, the coalition can do it for the North Sea.
Maybe now that you and your colleague MPs are in election mode and knowing that there’s no love lost between your party and the Tories, perhaps the time has arrived for you to speak out on the North Sea, bearing in mind how important oil & gas is to your constituency.
This could include spilling the beans on who hatched the additional tax grab of 2011 and which backfired on you, anecdotally the supposed ‘back of a fag packet’ architect.
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