Fuel industry rejects petrol price claims
Oil industry figures have scotched Labour's claim that higher taxes on North Sea explorers will cause petrol retailers to hike prices at the pump, but warned that investment would suffer.
Pump price: Petrol retailers could bring in products from Germany or Holland to sell on the forecourt
Labour said the 'fair fuel stabiliser', which will see oil explorers slapped with an extra £2bn in taxes to pay for a cut in fuel duty, would see firms pass the cost on to consumers.
But industry body Oil & Gas UK said the claim was flawed, due to the separation between exploration firms and those which sell the refined end product, petroleum.
Mike Tholen, economics director of Oil & Gas UK, said: 'These are very separate businesses. Petrol retailers could be bringing in products from Holland or Germany to sell on the forecourt.'
He said even 'vertically integrated' companies such as Shell (up 34.5p to 2234.75p) and BP (up 10.65p to 480.85p), which explore for oil and sell petrol too, were required by law to keep prices at the pump separate from costs in their 'upstream' businesses, industry slang for exploration and pro-duction.
'There are many mechanisms to make sure the cost of producing oil upstream doesn't influence your downstream business because that's illegal,' he said.
'I'm extremely confident that any change in prices on the forecourt will not have anything do with this tax.' However, he reiterated concerns that higher taxes would drive away the investment required to squeeze the last drops out of Britain's North Sea oil and gas reserves.
And Leo Koot, managing director of North Sea explorer TAQA Bratani said: 'The UK is now one of the least fiscally competitive upstream regimes for mature fields in the world and the uncertainty faced by investors can only be detrimental to any future investment decisions.'
Meanwhile, oil explorer Premier Oil (up 77p to 1987.5p) sought to mark itself out from rivals, saying it would be largely unaffected by the harsher tax regime.
Chief executive Simon Lockett said the firm had £1.1bn of tax allowances to use up, meaning it was not due to pay any corporation tax for five years anyway, adding that the tax would make potential acquisition targets cheaper.
Premier reported record profit before tax of £80m and Lockett said the firm was on track to meet a production target of 75,000 barrels per day (bpd) once three projects come on stream in 2012.
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