Business Comment: When decisions are rigged to reduce oil costs

Buried somewhere deep in a Whitehall vault are the minutes from a series of inter-departmental meetings that took place in Aberdeen a couple of years back on how best to dispose of redundant North Sea oil rigs. Every aspect of the debate was discussed, huge numbers of learned academics were consulted and much angst was expended on examining the options. As so often in these things, however, it was in the end cost that became the dominant issue.

Nobody cared a damn about the cost to the industry, of course. It was the cost to the Exchequer in lost petroleum revenue tax that caused the concern. As we now know, some of the cost of disposing of these rigs can be offset against PRT. In essence, the taxpayer picks up half the tab. As a result, the Treasury was determined that the cheapest possible solution should be found and it worked hard on finding, and paying, the right scientists and enviromentalists to support its case.

Nothing can excuse Shell's behaviour and conduct over the Brent Spar fiasco, but, as can readily be seen, the Government played not a small part in bringing about this lamentable episode. Certainly the grovelling apology sent by John Jennings, chairman of Shell Transport and Trading, to John Major seems to many oil industry executives a trifle unwarranted. If the oil industry wanted cheap solutions, so, spurred on by the Treasury, did the Government. Undoubtedly the Prime Minister was "let down" by Shell when the company did its spectacular U-turn, but that was not because ministers had unselfishly lent their support to the cause of "a major British company". It was because they shared a common interest.