On 06/05/2022 12:38, Chris Hogg wrote:
> Seeing the massive profits announced recently by the likes of Shell
> and BP, the whole business makes me angry.
>
> They hide behind the explanation that it's market prices across the
> world, brought on by the Covid pandemic and Russia's invasion of
> Ukraine.
>
> But their supply costs haven't gone up much - a few percent maybe -
> and they're just taking advantage of the global energy prices to cash
> in. It costs little more to extract gas or oil from under the North
> Sea today for example, compared to three or four years ago, especially
> as all the exploration work, drilling, pipeline-laying etc, was
> finished decades ago. All they have to do is man the platforms and
> open and close valves, as appropriate.
>
> I do hope the government slaps a whacking great windfall tax on them,
> which, bearing in mind I've never had socialist tendencies in my life,
> shows just how annoyed it makes me!
>
It is supply and demand.
Suppliers, in particular Russia, wanted long term fixed price contracts.
When covid caused energy demand to collapse, customers were quick to
take advantage. So it is natural, suppliers wouldn't be feeling generous.
So, what exactly do you tax?
We can tax local production, but anything else, and long term, companies
will find a way around it, very likely to the UK's detriment.
The proper answer is to have supply security. But as you, and others,
have noted, energy policy has been cloud-cuckoo-land for decades. Now we
have cloud-cuckoo-land notion of doing without Russian resources.
More generally, globalisation has left us open to many supply
insecurities. After Ukraine, and the sanctions on Russia, countries
across the world will be looking for such security. Obviously
security/self-sufficiency is easier in a large stable, trustworthy,
community.
It really would have been better to let Russia do as they wished and
take the time to sort ourselves out.