The $100bn Norwegian state energy company Equinor has privately told industry contacts it is reconsidering its plan to drill for oil and gas in the Rosebank field near the Shetland Islands.
Sources said Equinor wants the Government to change the terms of its so-called Energy Profits Levy before committing to the investment.
Shell has separately told analysts it is also less likely to develop the £2bn Cambo project in the North Sea after the introduction of an additional 25pc tax on energy company profits.
Incentives matter, do they? Is this something we should study a little more then?
Mostly off topic but tangentially related Tim, this is a good read
https://palladiummag.com/2022/06/09/why-america-cant-build/
The entire $160 million-per-mile road lane project, and the five years of gridlock it created, were justified by the promise of shaving one minute per mile off commute time for its users. The final indictment of the project was a Metro study that found that Sepulveda had actually made commute times longer.
…
The principal-agent problem arises with union construction labor as well. Skilled union workers, such as electricians and carpenters, make solid hourly wages, but their pay really explodes with overtime. A 2011 study by the Real Estate Board of New York found that some union crane operators made up to $500,000 a year in pay. Union contracts mandate unnecessary positions as well, to the benefit of its members. The same study found 50 workers in unnecessary positions such as relief crane operators on the World Trade Center Project, including 14 unproductive employees making $400,000 a year at the project.
Similar statistics can be found on other projects; an investigation into the costs of the East Side Access rail project in New York, which cost nearly $3.5 billion for each new mile of track, found that only 700 of the 900 workers being paid on the project were needed. A TBM, which is largely run automatically and typically staffed with under 10 people, ostensibly had 25 or 26 people working on it. Because you can’t drill without a TBM, and you can’t build a high-rise without a crane operator, these union workers have inordinate power.
Yep. “Good unions jobs” eh?
We tend to be blunt colonials here in Oz, Tim. We just say ‘No!!! You can’t rape Holy Mother Gaia.’
But now I’m thinking of the Adani coal mine. The Greens, backed of course by the State Government, have been trying to strangle it by litigation for years.
@interested
Thanks for the link. I found it surprising that they reckon europe is better than the sceptics at the moment. Did they forget about Berlin’s new airport?
Automate train driving.
@Interested…
Story reminded me of my family business 30-odd years ago… It bought a big offset-litho press from one of its larger competitors, who having sold it (very cheaply) commented that they were glad to see it go as they’d never managed to run it at a profit.
They were a fully-unionised shop, and the print unions were (possibly still are) notorious for setting ludicrous staffing-levels – in this case a minimum of 12 skilled printers per shift to run it. The old man’s outfit wasn’t unionised and managed to run the thing perfectly successfully with two skilled printers and “a lad”. Nicely profitable too – for everybody – they were paying better than union rates anyway. 🙂
We don’t even need to theorize; Boy George got a gas field shut down by grabbing extra tax.
Some of the people pushing these taxes know incentives matter, and they specifically want to destroy the oil companies. They must be raging that many of the oil retailers are following the market and installing electric charging points. BUT WE NEED TO DESTROY SHELL/BP/ETC, HOW DARE THEY!!!!!
“Union contracts mandate unnecessary positions as well, to the benefit of its members.”
From what TV has taught me, it’s to the benefit of guys with names like Paulie, Vinnie, Chrissie, and Fat Pete.
Interested:
For example, the energy company Oxy is currently in preconstruction on a $1 billion direct air capture (DAC) plant in Texas. DAC plants remove carbon dioxide from the air and then convert it into concentrated carbon that can be sequestered or re-used
Holy shit, that’s insane.
@Gunker
That surprised me too. But I suppose bigger economies have more scope for grift etc?
@Baron
I bet there are 10,000 similar stories. This is why these scum are such a cancer – if they left us alone there’s more than enough wealth for all.
@Steve
Even more insane when you read the next sentence: ‘This approach requires Oxy to know it will likely lose money on the project.’
The whole piece is full of spectacular lunacy eg:
Shortly following the passage of NEPA, California’s then-governor Ronald Reagan signed the California Environmental Quality Act (CEQA) into law, which required additional environmental impact analysis. Unlike NEPA, it requires adopting all feasible measures to mitigate these impacts. Interest groups wield CEQA and NEPA like weapons. One study found that 85 percent of CEQA lawsuits were filed by groups with no history of environmental advocacy. The NIMBY attitude of these groups has crippled the ability of California to build anything. As California Governor Gavin Newsom succinctly put it, “NIMBYism is destroying the state.”
It is also destroying the U.S.’s ability to build nationally. The economist Eli Dourado reported in The New York Times that “per-mile spending on the Interstate System of Highways tripled between the 1960’s and 1980’s.” This directly correlates with the passage of NEPA. If anything, the problem has gotten worse over time. Projects receiving funding through the $837 billion stimulus plan passed by Congress in the aftermath of the financial crises were subject to over 192,000 NEPA reviews.
The NEPA/CEQA process incentivizes the public agencies to seek what is often termed a “bulletproof” environmental compliance document to head off future legal challenges. This takes time, with the average EIS taking 4.5 years to complete. Some have taken longer than a decade. A cottage industry of consultants is devoted to completing these documents, earning themselves millions in fees.
We don’t deserve to survive.
BaronJ
When I was a lad, I worked at a small firm in Battersea who used a Kurzweil reader to digitise books and newspapers. We had to have a member of one of the print unions on the staff deite the fact that we did not actually produce anything on paper !
“…Oxy is currently in preconstruction on a $1 billion…”
“Preconstruction” eh? Love it. AKA “Baksheesh”
At the dawn of the North Sea industry the deal was that offshore labour would be non union. That lasted a while, but the unions eventually got their foot in the door. And my day rate went down thirty quid, about 10% on average.
Unions get fat on the number of subs. So the interests of labour (higher wages) and the interests of unions (more members) are misaligned.
DAC plants remove carbon dioxide from the air and then convert it into concentrated carbon that can be sequestered or re-used
Turn it into coal you mean?
$3.5 billion for each new mile of track
Crikey, that’s nearly as expensive as HS2!
No doubt the pensioners who are direct and indirect shareholders of XOM et al are pleased at having to pay their incidental share of this tax.
My old man’s outfit also wasn’t unionised and he always paid more than union rates too. One advantage of having a company run sensibly with good employees was that it survived through one horrible industry downturn when he kept the company alive and managed to lay nobody off even when there was no work for them to do. Because loyalty cuts both ways.
@decnine, June 19, 2022 at 9:02 am
1960s Victoria line and subsequent are automated, but successive Gov’ts have surrendered to unions. “Driver’s” job is to push an ON switch, then sleep
Rail revenues and passenger numbers half of pre-Covid levels
The Office of Rail and Road said the industry generated £5.9 billion from ticket sales in 2021 and 2022 – 54% of the £11 billion raised two years ago
https://www.dailymail.co.uk/news/article-10923661/
We can sack ~50% of train drivers then, those who accept a 20% Pay Cut keep their jobs
@G2
…and Brown killed investment for over a decade with his tax grab
It’s like they’re trying to kill UK oil and gas industry while empowering foreigners…
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