Oil price hike sees revenues rocket
TAXES raised from the North Sea are set to soar beyond previous forecasts because of the rising price of oil.
The Office for Budget Responsibility yesterday massively upgraded its forecasts for revenues from the industry. It said an extra £1.4billion a year will now be raised from the oil and gas industry compared to estimates from March.
Estimated tax revenue from oil and gas is now expected to rise from £400million in 2020/21 to £1.4billion this year, which is £900million higher than the March forecast.
The estimated revenue for 2022/23 has been upgraded by £2.1billion, to £2.5billion, while 2023/24 revenues are expected to be £1.7billion, up £1.4billion on the previous forecast. In a report published yesterday, the OBR said: ‘Oil and gas receipts have been revised up from our March 2020 and March 2021 forecasts for all years from 2021-22 onwards.
‘Relative to March 2021, the upward revision averages £1.4billion a year. This is almost entirely explained by higher oil and gas prices. Our forecast for gas prices is based on futures prices over the ten days to September 15.
‘Since then, oil prices have risen 4.7 per cent while gas prices have soared 65.7 per cent.
‘All else equal, this would add £2.3billion to receipts in 2022-23, but only £1.2billion by 202627, reflecting the downward sloping forward curve for gas prices.’
In his Budget speech, Rishi Sunak said global wholesale oil prices in the year to September have more than doubled, leading to a surge in energy prices.
He said: ‘The pressures caused by supply chains and energy prices will take months to ease. It would be irresponsible for anyone to pretend that we can solve this overnight.’
Earlier this week, Nicola Sturgeon sparked a row with the oil and gas industry after vowing to end Scotland’s reliance on fossil fuels as fast as possible.
Speaking in Glasgow ahead of the Cop26 climate change summit, the First Minister said it was ‘tempting’ for politicians to argue exploitation of oil and gas ‘until the last possible moment’ but continued exploration would be ‘wrong’ in the face of a climate emergency.