The price differential between Britain and America is almost entirely due to taxation. Americans are enraged that they are paying $4 a gallon, they would probably have another revolution if they had to pay the equivalent of $12 a gallon as the British do. Even Europeans pay lower fuel taxes than the British, in some cases dramatically lower tax rates.
In the 2005 budget Gordon doubled the tax levy from 10% to 20% on oil explorers. At the time the Offshore Operators Association said it was “shocked” by the chancellor’s decision. “At a single stroke, the Treasury has rewritten the industry’s future. It will severely undermine business confidence,” warned the OOA chief executive, Malcolm Webb, “This has been done not once but twice in the space of just three years and we fear that this time the North Sea will not be as resilient.” And so it has proved.
Former oil trader Alan Duncan, the Tory Business Shadow, says Brown‘s actions over oil production are “not just laughable, but pitiful… he has completely lost the plot.” The government has belatedly today exempted 30 unprofitable oil fields from Petroleum Revenue Tax and granted licenses to two new sites. It was Gordon himself who doubled the Petroleum Revenue Tax three years ago.
What bemuses Guido most is that in the midst of all these difficulties, Alistair Darling is still dithering and doesn’t know if he wants to delay adding 2p a litre to fuel costs. He doesn’t know? He really doesn’t have a clue does he?
UPDATE : Osborne spotted the problem last year.