Sometime we are asked question to which the answer is obvious:
Is the answer to Britain’s problem of how to revitalise the North Sea creating a new national oil company?
The justification offered for this bizarre idea is as follows:
Given the harsh new realities of attracting the right kind of investment into the North Sea now could be the right time to revive the idea of a new British National Oil Company. This would help to fill the void that is left as companies like Royal Dutch Shell, Chevron, BP and Total gradually start to moderate their investment in the region.
Well run, technologically superb, profit seeking companies are leaving the North Sea. Thus we should substitute a state managed (for which read "not well run"), technologically naive because it is new, and not necessarily profit seeking company to try to exploit the same assets.
It's not going to work, is it? Throwing the state and bureaucracy at something not deemed profitable does not suddenly make the state's activities profitable. And we really do want our tax money, if it is to be invested in industry at all, to be invested in things that make a profit. To do otherwise is to make us all poorer.
The correct action in the North Sea is to, as we have been all along, capture the resource rents through taxation and ten leave well alone. If the best people in the world think it's worth exploring or extracting oil under such circumstances then great. If they think it's not worth it then so be it. Having investment decisions made by the Treasury is not going to improve matters here.
If it's difficult to attract the "right sort of investment" then perhaps the right sort of investment is none?