Most Popular
1. Dow Max Drawdown Bear Stock Market 2022 - Accumulating Deviations from the Highs - 21st Feb 22
2.Putin Starts WW3 in Ukraine, Will Use Tactical Nuclear Weapons, China Prepares Taiwan Blitzkrieg - 28th Feb 22
3.World War 3 Phase 1 - Putin WINS Ukraine War! - 25th Feb 22
4.INVESTORS SEDUCED by CNBC and the STOCK CHARTS COMPLETELY MISS the BIG PICTURE! - 10th Feb 22
5.Will There Be A 2024 US Presidential Election? - 3rd Mar 22
6.Gold and SIlver, Precious Metals Sector Is at a Terrific Buy Spot - 6th Feb 22
7.Why Putin Wants the WHOLE of Ukraine - World War 3 Untended Consequences - 6th Feb 22
8.Dow Stock Market Expected Max Drawdown 2022 - 19th Feb 22
9.Stock Market Calm In the Eye of the Inflation Storm - 4th Mar 22
10.M = F - Everything is Waving! Stock Market Forward Guidance - 7th Mar 22
Last 7 days
Britain's Hyper Housing Market - 27th May 22
Lower Copper price due to Chinese lockdowns is only Temporary - 27th May 22
How the United States Conquered Inflation Following the Civil War - 27th May 22
Greater Depression Now!? - 27th May 22
Stocks: Is the Really Scary Part Just Ahead? - 27th May 22
The Dark Side of the Internet - Cybersecurity - 27th May 22
Why Ray Dalio is WRONG About China - Principles for Dealing with the Changing World Order - 24th May 22
Globalists Convene to Plan Central Bank Digital Currencies - 24th May 22
After Recent Highs, What’s Next for the Gold Junior Miners? - 24th May 22
Why APPLE Could CRASH the Stock Market! - 21st May 22
Why Is Crude Oil Ignoring US Inventories? - 21st May 22
Here is Why I’m Still Bullish on Gold Mining Stocks - 21st May 22
THE INFLATION MEGA-TREND QE4EVER! - 20th May 22
US Real Estate Investors – Is There An End In Sight? - 20th May 22
How Technology Affected the Gaming Industry - 20th May 22
How To Set And Achieve Reasonable Goals For Your Company - 20th May 22
How Low Could the Amazon (AMZN) Stock Price Fall? - 19th May 22
Bitten by FANG? Clocked by Cryptos? -- 'Air Pockets' Everywhere - 19th May 22
Northern General Hospital Orthopedics Fractures and and Ankle Clinic Consultations Real Patient Experience - 19th May 22
Cathie Wood Goes All in on Teladoc, ARKK INSANE Noob Investing Strategy! - 17th May 22
This is Anything but Positive for US Housing Market - 17th May 22
What Should We Do If There Is No Fed Monetary Policy Pivot? - 17th May 22
All Possible Ways to Earn Free Litecoin - 17th May 22
How low Could the Amazon Stock Price Fall? - 16th May 22
Cathy Wood ARKK INSANITY There is NO Coming Back! - 16th May 22
NASDAQ 100 Stock Market LOWER LOWS & LOWER HIGH - 16th May 22
Sanctions, trade wars worsen US inflation - 16th May 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