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United Kingdom Oil Companies (Profits)

Volume 976: debated on Friday 21 December 1979

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asked the Secretary of State for Energy what is his estimate of the increase in (a) the gross trading profits of United Kingdom oil companies and (b) Government receipts, resulting from each additional charge of one dollar per barrel in OPEC prices.

It is not possible in present circumstances to give reliable estimates of the gross trading profits of United Kingdom oil companies and Government receipts following an OPEC price increase. Because of changing patterns of crude oil supply arrangements and in the absence of a uniform OPEC price increase the costs to a United Kingdom company of crude oils will vary according to its sources of supply. Profits will be affected by the extent to which higher costs are recovered from product sales in the market, the impact of currency fluctuations, treatment of stock valuation, variation of remitted profits from overseas operations and other factors. Government receipts will be affected by these factors and the tax position of individual companies; in particular tax receipts for United Kingdom continental shelf operations will be affected by the front end loading of petroleum revenue tax capital allowances, which will mean that price increases may not lead immediately to increased tax from some North Sea fields although in the longer term receipts will rise.