Tax isn’t the worst at Harbour Energy

This is all very Soviet:

Britain’s biggest oil and gas producer is axing investment in the UK and diverting cash to countries including Norway after Labour’s windfall taxes left it with an 111pc tax rate.

In the late 1920s the Soviets, at the end of the New Economic Policy (which had allowed the continuation of small scale private businesses), started taxing private businesses at 110, 120% of profits. To, simply and deliberately, drive them out of business. Of course rather sterner measures were used a little later but still. Tax rates of more than profits only work to close down businesses.

But that’s not the worst of what is happening at Harbour Energy as a result of Ed Miliband’s insistence upon a revenge against that bacon sandwich. From the results themselves:

New wells on-stream including at Maria Phase 2 (Norway), the Vaca Muerta (Argentina) and in the UK; approved developments on track including start-up of Dvalin North (Norway) in late 2026

Investment decision taken on Southern Energy SA, a 6 mtpa phased LNG project in Argentina, creating the potential to unlock significant value for our Vaca Muerta gas

Vaca Muerta is that fracking field in Argentina. So, Harbour is not, now, drilling for oil and or gas where we, the UK, get all the royalties and taxes upon profits. Instead it’s drilling half the world away, making LNG then shipping it back to Europe. Where we, in the UK, get none of the royalties, taxes and so on.

How very sensible that is as an energy policy, eh? Next time we’re rooting for the bacon sandwich.

Tim Worstall