Chancellor George Osborne just gave the British oil industry a series of tax breaks, and now shares in Britain’s biggest oil companies are popping.
As part of the Budget, Osborne announced a series of measures to help out Britain’s oil and gas industry which has taken a beating in the past couple of years thanks to the crash in the price of oil. The world’s most widely used commodity has fallen from more than $100 per barrel in 2014, to around $40 now. Oil in the UK costs more than $50 per barrel to produce, so the UK’s industry has been particularly hard hit.
The measures introduced include:
- The effective abolition of the current Petroleum Revenue Tax. The rate will be cut from 35% to 0% permanently, something the chancellor said will “level the playing field between investment opportunities in older fields and infrastructure and new developments.”
- The Supplementary Charge — an added tax on the profits of oil companies — will be cut from 20% to 10%.
- Increasing the powers of Britain’s Oil and Gas Authority to decommission oil fields, something the government says will help reduce costs for the industry.
The government said after the announcement that it “believes in making the most of the UK’s oil and gas resources. The oil and gas industry delivers significant economic benefits, supports hundreds of thousands of jobs and supplies a large portion of the nation’s primary energy needs.”
Tax relief seems to have been very well received by Britain’s oil companies, with shares in the FTSE 100’s biggest oil firms — BP and Royal Dutch Shell — both popping more than 3% straight after the announcement. Here’s how that looked:
Britain’s small oil firms have also popped this afternoon, with Tullow Oil gaining around 5.5% so far on the day, and Premier Oil up more than 7%.