Facebook LinkedIn Twitter

IAEE Members and subscribers to The Energy Journal: Please log in to access the full text article or receive discounted pricing for this article.

British and American Tax Treatment of U.K. North Sea Oil Fields

In its quest for additional revenue, the U.K. government has made a major change in the taxation system for North Sea oil fields. A new tax, the Supplementary Petroleum Duty (SPD), has been introduced, and the terms of the Petroleum Revenue Tax (PRT) have been tightened. The new tax system was introduced in March 1981 but was effective as of January 1, 1981. The new system has been criticized on the basis that it would substantially reduce the incentives to develop smaller fields and that it tends to discriminate against U.S. oil companies. This paper examines these criticisms. It analyzes the economics for a U.K. company of developing an oil field by field size. It then shows the changes in these economics created by the new U.K. taxation system. The final section of the paper deals with the interrelationship between the U.S. and U.K. tax treatments of North Sea oil.

Purchase ( $25 )

Energy Specializations: Petroleum – Exploration and Production; Petroleum – Policy and Regulation

JEL Codes:
D24 - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: North Sea oil, Taxes, UK, US, Energy policy

DOI: 10.5547/ISSN0195-6574-EJ-Vol3-No2-3

Published in Volume 3, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.