Azara Blog: Shell cuts North Sea exploration plans

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Date published: 2005/12/17

The BBC says:

Oil giant Shell has cut its plans for North Sea exploration, blaming Chancellor Gordon Brown's tax hikes for the move.

The company had planned to hire three drilling rigs, but has decided to reduce the number to two.

Shell said it took the decision after a review prompted by the chancellor's decision to increase a charge on profits from 10% to 20%.

The Treasury said the charge compared favourably with tax regimes abroad.

However, the Scottish National Party warned that the move would cost jobs in Scotland.

Leader Alex Salmond said: "The chancellor's tax grab on the North Sea was a crude attempt to hide the black hole he has created in Britain's finances, and the cost is now being felt here in Scotland.

For once Alex Salmond is not talking complete nonsense. Of course Shell might just be trying to make excuses, but it is obvious (for normal goods and services) that the more you tax something, the less that will be produced. Gordon Brown is unfortunately spending far too much money, so has to cover the "black hole" from somewhere.

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