Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
Qualcom Stock Market Harbinger - 12th Aug 22
Apple Exec Gets World's 1st iPhone 14 for Daughters 14th Birthday Surprise Present Unboxing! - 12th Aug 22
Steps to remember while playing live roulette online - 12th Aug 22
China Bank Run Protests - Another Potential Tiananmen Square Massacre? - 11th Aug 22
Silver Coin Premiums – Another Collapse? - 11th Aug 22
Gold-to-Silver Ratio Heading Lower – Setup Like 1989-03 - 11th Aug 22
Severe Stocks Bear Market: Will You Be Among the Prepared 1.5%? - 11th Aug 22
There's a Hole in My Bucket Dear Liza, UK Summer Heatwave Plants Watering Problem Song - 11th Aug 22
Why PEAK INFLATION is a RED HERRING! Prepare for a Decade Long Cost of Living Crisis - 9th Aug 22
FREETRADE Want to LEND My Shares to Short Sellers! - 8th Aug 22
Stock Market Unclosed Gap - 8th Aug 22
The End Game for Silver Shenanigans... - 8th Aug 22er
WARNING Corsair MP600 NVME2 M2 SSD Are Prone to Failure Can Prevent Systems From Booting - 8th Aug 22
Elliott Waves: Your "Rhyme & Reason" to Mainstream Stock Market Opinions - 6th Aug 22
COST OF LIVING CRISIS NIGHTMARE - Expect High INFLATION for whole of this DECADE! - 6th Aug 22
WHY PEAK INFLATION RED HERRING - 5th Aug 22
Recession Is Good for Gold, but a Crisis Would Be Even Better - 5th Aug 22
Stock Market Rallying On Slowly Thinning Air - 5th Aug 22
SILVER’S BAD BREAK - 5th Aug 22
Stock Market Trend Pattren 2022 Forecast Current State - 4th Aug 22
Should We Be Prepared For An Aggressive U.S. Fed In The Future? - 4th Aug 22
Will the S&P 500 Stock Market Index Go the Way of Meme Stocks? - 4th Aug 22
Stock Market Another Upswing Attempt - 4th Aug 22
What is our Real Economic and Financial Prognosis? - 4th Aug 22
The REAL Stocks Bear Market of 2022 - 3rd Aug 22
The ‘Wishful Thinking’ Fed Is Anything But ‘Neutral’ - 3rd Aug 22
Don’t Be Misled by Gold’s Recent Upswing - 3rd Aug 22
Aluminum, Copper, Zinc: The 3 Horsemen of the Upcoming "Econocalypse" - 31st July 22
Gold Stocks’ Rally Autumn 2022 - 31st July 22
US Fed Is Battling Excess Global Capital – Which Is Creating Inflation - 31st July 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Britain's North Sea Crude Oil Revenue Bonanza

Politics / Crude Oil May 30, 2008 - 02:52 AM GMT

By: Nadeem_Walayat

Politics Best Financial Markets Analysis ArticleThe surge in the crude oil price has greatly benefited the major oil exporters such as the gulf states, Russia, Venezuela, and Norway. Despite Britains consumption of crude oil roughly matching production, the rise in crude oil has resulted in a huge continuing revenue bonanza for the British government through profit share on production, taxes on oil company profits and from tax revenues on domestic consumption, which has lead to protests amongst hauliers and motorists.


Despite a peak in UK oil production at 3 million barrels a day in 1999, the oil price rises since have ensured a near steady gain in oil sea revenues that have more than offset the reduction in output. The expectation is that the high oil price will now make smaller and more expensive oil fields profitable with the average cost per barrel of North Sea Oil remains at under $20 per barrel and therefore this is expected to lead to an increase in oil production over the next few years, thus contributing to UK's oil profits bonanza continuing for many more years as cost rises towards $25 per barrel are substantially below a crude oil price north of $100.

At an average price of $110 the UK will rake in record revenues of more than $60 billion from just crude oil. Add the value of gas production then this year could see revenues in excess of $100 billion. Contrary to government statements, the oil bonanza will boost government coffers by as much as $40 billion this year (£20 billion) which gives plenty of scope for the UK government to cut taxes on fuel duties for motorists that are already one of the heaviest taxed in europe. Perhaps this may form part of an election engineering strategy during 2009?

The UK has benefited hugely from the North Sea Oil and Gas Bonanza to the tune of more than $1 trillion. What have successive governments done with all this bonus cash ? WASTED IT ALL! Without exception, the whole lot has been wasted on inflationary, uncompetitive public sector works, and not one single penny of this $1 trillion has been set aside. Had we followed the example of Norway we would now be sitting on a sovereign wealth fund of more than $250 billion, even after allowing for half of the money having been wasted on public spending projects. $250 billion would generate at least $15 billion of revenue per year, and therefore act as the countries pension. The sensible governments of Norway have ensured that a large part of their North Sea oil money sits in a Sovereign Wealth Fund that has mushroomed to more than $250 billion or $53,000 for every Norwegian. Even the corrupt gulf state dictatorships have managed to build-up huge cash mountains despite having siphoned off hundreds of billions over the decades through corruption.

When North Sea Oil eventually runs down, what will we have to show for it ? And how will we cope with the loss of revenue that has helped keep Britain economically afloat for going on 30 years.

If we we had sensible government then we would be now setting aside 50% of every penny earned from North Sea for the hard times when North Sea Oil will be no more. Instead the monies have flowed into black holes such as the NHS where money meant for healthcare is pocketed by managers, doctors and GP's, hence a tripling in budgets has resulted in barely a 30% increase in output.

By Nadeem Walayat

Copyright © 2005-08 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading, analysing and forecasting the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 150 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Attention Editors and Publishers! - You have permission to republish THIS article if published in its entirety, including attribution to the author and links back to the http://www.marketoracle.co.uk . Please send an email to republish@marketoracle.co.uk, to include a link to the published article.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in