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Robert Halfon and Alan Pond: Brown's oil leak

Robert Halfon, Harlow Prospective MP, and Alan Pond, President of Harlow's Conservative Association, argue that Brown's handling of the oil industry should rank amongst his more high profile failures.

As Prime Minister can Mr Brown claim complete satisfaction with his past decision making? Will he be capable of accommodating decisions affecting both domestic and international affairs, reconciling current black holes with long-term planning?

Consider the oil industry’s presence in the North Sea. It is truly an international business where long-term decisions are made daily. Forty years ago, the Oil Majors commenced a programme of crude oil exploration and production in the very hostile conditions of the North Sea. £300 billion has since been invested providing £200 billion of tax revenue to the Treasury.

More recently, £8 billion was the annual investment in 2004 by the oil industry and this was expected to increase in 2005 to £10 billion due to Treasury requests to increase production during a temporary international shortage. The latter blip forced up product prices and short-term oil industry profits.

Facing a financial budget black hole, Mr Brown chose to impose an extra North Sea crude oil and gas tax of £2.3 billion per annum contrary to internal Treasury, oil company and banking advice. With North Sea exploration and production now unviable, investment has drifted down and is now forecast to have declined to £4 billion in 2007 and production of oil and gas by 12%.

Three years ago the Government’s own forecast stated that provided annual investment was maintained, 85% of the UK’s energy needs will be maintained from the North Sea to 2020. This will now be reduced to 45%. This is at a time when we face an re-emergent authoritarian Russia which currently controls 25 percent of Europe's gas supplies.

Will user nation governments never learn? The international recessional problems of the 1970/80s were caused by user nations taking more in taxation from a barrel of crude oil than they gave to the Middle East producers. Now, they are even doing it to themselves! There are now 25 billion barrels of oil left in the North Sea that may never be recovered.

For the past few weeks, the Labour Party have attempted to perpetrate 'a year zero' on the British people. An attempt has been made to sleep walk the public into believing the last ten years never ocurred - that a new era has begun.  But Mr Brown's plan for 'year zero' will not succeed in the long run. The Government cannot succeed in the face of its own internal contradictions-failing public services, widespread cynicism from the public about politics and significant economic clouds ahead (particularly the huge level of personal debt).

Only a few weeks ago, the Prime Minister was exposed for having ignored advice about taxing pensions funds. In the heady days of the new Premiership, this  has all but been forgotten. As Conservatives, it must be our job to remind the electorate of important truths.

Our Pensions, our gold reserves and our oil revenues have been frittered away by Gordon Brown. To paraphrase John Reid, is the new Prime Minister really fit for purpose?


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