U.K. Minister Indicates Levy on Oil Profits Unlikely (Update1)
By Alex Lawler
London, Feb. 15 (Bloomberg) -- A U.K. minister signaled the government won't impose a special tax on North Sea oil producers, even as BP Amoco Plc posted Britain's highest-ever corporate profit because of high oil prices, a Treasury spokesman said.
The Treasury's Financial Secretary, Stephen Timms, yesterday told a Parliamentary committee hearing on fuel prices that the government would not make short-term decisions based on short-term factors such as high oil prices, the spokesman said. Chancellor of the Exchequer Gordon Brown presents his budget for the financial year starting in April on March 7.
Soaring profits at BP and Royal Dutch/Shell Group brought renewed criticism from fuel consumers who accused companies of profiteering. U.K. gasoline prices are among Europe's highest, though fuel taxes represent some three-quarters of the cost.
Oil companies argue that while earnings from pumping oil rose, their U.K. fuel sales are barely profitable. Shell in 2000 broke even from selling fuel in Britain, having made a loss in the five preceding years. Companies point out that excluding taxes, U.K. gasoline prices are among the lowest in Europe.
BP reported fourth-quarter profit of $4.1 billion this week, the third-highest corporate profit ever, while Shell posted record earnings of $3.58 billion, mainly because of crude oil prices that soared to more than $30 a barrel.
Shell and BP are the two largest oil producers in the U.K. North Sea, where companies pump more than 2 million barrels of oil daily, earning the government 2.5 billion pounds ($3.6 billion) in revenue in the 1998-99 financial year.
Oil companies fought off a move by the government to impose a windfall tax on oil production from the North Sea after oil prices slumped to $10 a barrel in 1998, saying it would damage investment and jobs.
An industry group, the U.K. Offshore Operators' Association, has said it would be surprised if the government imposed a windfall levy, since both parties have been working together on initiatives to reduce costs and keep production rates steady.
Timms's remark ``demonstrates there is a greater understanding of the issues facing the industry in maintaining investment,'' said Trisha O'Reilly, a UKOOA spokeswoman. |
