Rishi Sunak would do well to stick with windfall tax U-turn

theguardian.com:

“We’re a cash machine at these types of prices,” Bernard Looney, BP’s chief executive, cheerfully declared last November when the price of a barrel of Brent fetched $85 (£60). Now a barrel costs $105, so it’s safe to predict that BP will be swimming in dollars when it reports first-quarter profits next Tuesday, even allowing for its well-flagged whack from getting out of Russia. The billions on show on Thursday at Shell, the larger company, will be even greater. Cue another round of debate about the merits of a windfall tax on North Sea oil and gas producers.

Thus Rishi Sunak, at the very least, was being politically smart this week in fudging his stance. The chancellor has previously been a firm opponent of a windfall tax, arguing it would discourage investment, the very thing he is trying to accelerate during an energy crisis that is partly about security of supply. Now he’s not so sure, or so he seemed to suggest to the Mumsnet website. “Nothing is ever off the table” if companies don’t ramp up investment in new projects, he said.

A U-turn still feels a long way off given the force of past statements; and note that Sunak’s interesting remark was preceded by a longer defence about why he hasn’t taken the windfall route, and how oil and gas producers are already paying tax at an effective rate of 40%. Perhaps the comment was just a prod to Looney to stop boasting about his cash machine and start hyping the BP billions going into UK windfarms, carbon-capture projects, hydrogen developments and electric charging points.

Yet one comes back to that high oil price – or, rather, to its persistence. It is impossible to be precise about the “war in Ukraine premium” in current oil and gas prices, but it obviously exists – and it is