The UK government has announced it will remove the 75 per cent windfall tax on oil and gas companies if the average price of oil falls to or below $71.40 per barrel for two consecutive quarters, and the average price of gas falls to under 54p.
On Friday morning, Brent crude oil was trading at $75.38 per barrel. UK gas prices were at around 64p per therm.
The windfall tax was put in place last year, as an attempt to mitigate soaring inflation and prices that have caused a cost-of-living crisis for many of the UK’s most impoverished households. In that time, it has raised £2.8bn to fund energy support schemes, and is expected to raise almost £26bn by March 2028.
If the tax stops, North Sea oil and gas operators will return to making 40 per cent profits.
Despite the tax, the rise in oil prices led to fossil fuel extractors such as BP and Shell reporting massive rises in profits in 2022.
However, the latest Offshore Energies UK’s (OEUK) Business Outlook report...