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Tim Worstall · 02-08-2008, 05:02 PM

"Sirs,
Claims that there should be a windfall tax on energy company profits seem to be more than a tad misguided. A number of points come to mind: with respect to petrol prices for example, the government is already taking the majority of the price paid at the pump and this amount has risen along with prices. If prices need to be lowered to help the poor perhaps this would be a good starting point?
British Gas, to look at another company, actually saw its distribution profits fall which doesn't sound like a reason for an increase in taxation. Its production arm already pays higher taxes than anyone else in the FTSE 100 (and 75% on profits from gas production in the North Sea) which again doesn't sound like an argument in favour of a rise.
But by far the most important point is that prices are high because there is something of a shortfall in discovery and production so we'd rather like companies to go and discover and produce more of the various fossil fuels. Rising profits are what make taking the risks of doing so more attractive. To complain of high prices while simoultaneously wanting to confiscate the very monies that will lead to greater discovery and production and thus lower future prices seems, well, a tad misguided. Incentives, after all, do matter.

yours etc.

Tim Worstall"

I don't know what they actually printed, but that's what I sent them.

A little inside knowledge. Newspapers sometimes actually ask people to submit letters: people they know will have a strong view on something or other. As here.

At the risk of making a point too often, that I've already got that sort of relationship with parts of the media is why I'm standing to be a candidate to be a candidate in London, where the media is based.

I also make a similar (but ruder) point here.

02-08-2008, 05:02 PM	#9 (permalink)
Tim Worstall Junior Member Join Date: Jul 2008 Posts: 94	"Sirs, Claims that there should be a windfall tax on energy company profits seem to be more than a tad misguided. A number of points come to mind: with respect to petrol prices for example, the government is already taking the majority of the price paid at the pump and this amount has risen along with prices. If prices need to be lowered to help the poor perhaps this would be a good starting point? British Gas, to look at another company, actually saw its distribution profits fall which doesn't sound like a reason for an increase in taxation. Its production arm already pays higher taxes than anyone else in the FTSE 100 (and 75% on profits from gas production in the North Sea) which again doesn't sound like an argument in favour of a rise. But by far the most important point is that prices are high because there is something of a shortfall in discovery and production so we'd rather like companies to go and discover and produce more of the various fossil fuels. Rising profits are what make taking the risks of doing so more attractive. To complain of high prices while simoultaneously wanting to confiscate the very monies that will lead to greater discovery and production and thus lower future prices seems, well, a tad misguided. Incentives, after all, do matter. yours etc. Tim Worstall" I don't know what they actually printed, but that's what I sent them. A little inside knowledge. Newspapers sometimes actually ask people to submit letters: people they know will have a strong view on something or other. As here. At the risk of making a point too often, that I've already got that sort of relationship with parts of the media is why I'm standing to be a candidate to be a candidate in London, where the media is based. I also make a similar (but ruder) point here.