Windfall tax wouldn’t stop BP’s £18bn parade of projects

theguardian.com:

‘We’re backing Britain,” declared BP’s chief executive, Bernard Looney, on Tuesday, which was a cuter spin on record quarterly profits of $6.2bn (£5bn) than his boast last November about running “a cash machine”. A debate about windfall taxes has raged ever since last autumn’s remark, which, note, was made when oil prices were $20-a-barrel lower than today’s.

But here’s a key point about BP’s plan to spend “up to” £18bn in the UK by the end of the decade in a programme spanning North Sea oil and gas, offshore wind, hydrogen facilities, electric vehicle charging points and carbon capture projects: it’s not new. The collection of projects is merely a tally of previously announced plans, some of which were backed even when BP’s cashpoint was suffering a relative splutter. The big offshore wind programme in the Irish Sea, for example, was unveiled 15 months ago.

At the margin, some North Sea oil and gas investments may have been accelerated, but it’s hard to be precise. The big picture is that BP has carefully shifted over time from investing about 10%-15% of its global capital expenditure in the UK, which was the approximate position over the past decade, to spending roughly 15%-20%. The change makes sense. In the renewables arena, where more of the cash is going, the UK’s tax and incentive set-up is seen as more attractive than that of international peers.

Thus, from a purely economic perspective, BP’s £18bn parade of projects shouldn’t change the windfall tax debate one jot. The investments would happen anyway – a point Looney more or less conceded.

Indeed, just by considering the back-of-the-envelope arithmetic, one can see why the financial dial wouldn’t move. The little secret about the Labour party’s version of windfall