Outlook According to the oil industry George Osborne was effectively shutting the North Sea down when he hiked the supplementary charge on producers to 32 per cent from 20 per cent.
The Chancellor made the point that when the tax regime was last altered in 2006 oil stood at $66 a barrel. It was double that when the new tax was announced, and Mr Osborne not unreasonably (for once) felt the taxpayer ought to share in some of the rewards.
Cue a chorus of complaints from the industry, combined with dire warnings that the tax would prove to be counter productive, with the exploration dollar heading for more favourable regimes (the sort of places where a suitably high bribe to the local despot – sorry, I meant of course a legitimate fee to his son's tip top consultancy – is all that's needed for an oil company to be allowed to drill away to its heart's content.
And yet despite all this a report released yesterday by a proper consultancy – in the form of Wood Mackenzie – says that the North Sea remains very much open for business.
Far from being shut down by the £2bn "windfall tax" it's never been healthier. While there is a nod to the industry's bitching – the report gets in a dig about "the instability of the UK's fiscal regime" – capital investment hit a record £7.5bn last year, despite the tax.
What's more, the report expects the situation to continue into 2012. Lead analyst Lindsay Wexelstein noted the success of recent licensing rounds which she said confirmed "the increasing appetite for UK exploration acreage".
Actually, exploration tailed off a bit, but only because companies active in the region chose to concentrate on developing their existing fields because of the high oil price – the same high oil price that was the justification for the tax.
The UK might squeeze a bit harder than those nice Norwegians for its part of the North Sea, but that doesn't mean oil companies can't still turn a very respectable profit.
It helps that the UK is basically a peaceful and relatively predictable place, in stark contrast to a lot of the world's oil-producing nations. Nor is there any instability when it comes to North Sea taxes. They are simply high and so they should be. Why shouldn't the taxpayer derive some benefit from the country's resources?
Mr Osborne appears to have taken on the offshore oil industry on and won. He might like to think upon that as he looks at certain other industries. Including those which are as much a burden on the taxpayer as they are a benefit.
Like banking, perhaps.