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DAILY TELEGRAPH: Oil firms 'must help poor pay their fuel bills': “Some of the money needed should come from the exceptional profits that these companies – including Shell, BP, Exxon, Centrica – are making…” ( Posted 27 Jan 05


By Tessa Thorniley


A senior Government adviser yesterday called for a windfall tax to be levied on the country's leading oil and gas producers to help relieve the millions of poorer households struggling to pay rising energy bills.


However, the producers and the industry body that represents offshore operators opposed the idea, claiming it would not drive down prices and would put jobs and investment in the North Sea at risk.


Peter Lehmann, chairman of the government-sponsored Fuel Poverty Advisory Group, told MPs that the country's major oil and gas producers had earned an extra £2 billion, after tax, from higher fuel prices since 2003.


"The Government has already done a great deal to tackle fuel poverty, but more needs to be done if it is to meet its targets. Some of the money needed should come from the exceptional profits that these companies – including Shell, BP, Exxon, Centrica – are making," he said. Mr Lehmann was giving evidence to the trade and industry committee, which is investigating high gas and electricity prices.


He said that £1 billion from the industry would be enough to enable the Government to meet its target of eradicating fuel poverty from vulnerable households by 2010. A fuel-poor household is one that spends more than 10pc of its income to keep the house warm.


It would not be the first time that the Chancellor has slapped a windfall tax on industry. Shortly after taking office in 1997, Gordon Brown levied a £5.2 billion one-off charge on the excess profits of privatised utilities to pay for his New Deal, Welfare to Work programme.


James Smith, the chairman of Shell UK, told the committee that a windfall tax would not drive down prices. "We recognise the high prices but we remember that seven years ago the price of oil was only $10 a barrel.


"We are confronted with major capital investment projects that can last 30 years or longer. We are looking for fiscal stability over that period because there will be high prices, as well as low prices.


"Any thought of windfall taxes – we would say consider the unintended consequences that we could end up denting investor confidence, not getting the full potential out of the North Sea and putting jobs at risk," Mr Smith said.


Wholesale gas prices have risen by 70pc over the past 18 months and electricity prices have followed suit.


The Government claims that every 10pc rise in retail energy prices pushes around 400,000 people into fuel poverty.


Steve Peacock, of BP Exploration, said yesterday: "The higher prices have generated extra tax revenues of £3 billion from the North Sea and its producers already pay a higher rate of corporation tax than in any other industry."


Malcolm Webb, chief executive of the UK Offshore Operators Association, said: "I think it would be a huge mistake to make policy decisions on a relatively short-term view of oil prices." 

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