Raising Taxes on Oil Does Have Consequences

Link here.

This is quite stunning. Imagine what would happen to the Bakken Boom if drilling activity declined by 40 percent.

Drilling activity in the UK North Sea has fallen by 36% year-on-year despite an oil price of more than $100/bbl which would normally encourage increased exploration activity.

“Elsewhere in northwest Europe, this buoyant oil price has driven high levels of drilling activity,” said Graham Sadler, managing director of Deloitte's petroleum services group.

“It could be that factors, including the relative geological maturity of the UK sector, compared to some adjacent regions, and the alterations made to the UK fiscal regime earlier this year have impacted business confidence,” said Sadler. [You think?]

In March, the UK’s Treasury raised the top rate of tax on profits from North Sea production to as much as 81%, a move that was decried by international oil companies as a disincentive to investment.

With the Marcellus, Utica, Niobrara, Haynesville, California Monterey, and South Texas Eagle Ford there are a lot of places US drillers can shift their attention if need be.