I have to differ, it is exactly the matter. In fact I asked why it is we are going after the companies when we can sort the problem out with public money, can we stop acting like the only money available is that in the profit margins of companies operating in the UK?

“’sort out our own stable first’ ignores the members of the public who need help now.”

Sorting out our own stable doesn’t mean sorting out regulation, it means stopping the dithering being made over whether to give middle classes yet more tax relief (like, say, in stamp duty) and to actually give it to the poor that need it. Compass doesn’t seem to care about the underlying issues that have caused the poor to drop further in to fuel poverty, only that it is seemingly “unfair” that companies have managed to gain profits.

“You don’t think there’s been an unexpected windfall on top of the expected profits, as said by Compass in today’s Indy? ”

Compass say a lot of things

In other words Compass want to redistribute the wealth which is being redistributed to the rich in poor countries to the poor in rich countries.

That’s not a choice I agree with.

thomas: utilities costs have risen by far more than the rises in your electricity & gas bills. The governments of countries with large stocks of oil and gas have been the main beneficiaries. Self-windfall-taxing oil companies have been secondary beneficiaries; everyone else has lost out.

so, for those who haven’t quite got there yet, please explain where the price rises have gone.

Have production and supply costs risen? Are middle-men speculating? Has profitability increased? How have finance and trade costs been impacted by currency markets? Is it a more mixed picture across the sector and globe than anyone here is arguing?

FWIW I think the prospect of a windfall tax is like taking a cricket bat out to play table tennis.

*raises hand to differ*. Fuel poverty bad; but profits not soaring.

Not that hilarious. I think we’re all agreed that the current enormous profits/soaring fuel poverty situation involves the regulator failing to do its job at some point, and that needs changing, but the question of whether to “go after the companies” in order to redistribute wealth in the short term so people don’t freeze is another matter. A windfall tax is almost certainly not the way to do it, but waiting to ‘sort out our own stable first’ ignores the members of the public who need help now.

I second the asking of this question (where “we” is Compass and their supporters, anyway).

Windfarm, 10% of all british companies profits or there abouts…to get 1% energy security that will not be directly distributed, if there are savings, to the poor.

There’s no way that what Compass are asking for…which is why I keep pressing about figures…is at all realistic in actually helping anyone.

It’s the crux of the issue. Why levy a windfall tax if it’s a one off thing, that doesn’t go any way to helping people in the long term? Oh…the point is that in the year leading up to a general election Labour would be taking from the rich and giving to the “poor”, which as Jeremy points out is more likely to be the middle classes than those that actually need it. And I’m not advocating continuous windfall taxes (the payouts given at the minute to social tariffs are formed through discussion rather than legislation to my mind), because similarly I see it as a slippery slope to simply telling all kinds of business that they’re not allowed to have an arbitrarily defined level of profit without having it taken away from them…a wholly counter-productive idea.

As others have said, you don’t need to tax energy companies to give poor people a short term break, you could simply lower taxes for a year while raising them at higher bands, stop creaming money off of social housing rent, stop introducing more legislation that disproportionately taxes the poor and generally do whatever tomfoolery it is that allows you to discuss reducing/removing stamp duty to just give poor people a bloody break for once. Why, I ask again, is it that we’re so keen to go after companies rather than sorting out our own stable first?

As for desirability, don’t make me laugh. The desirability is there for everyone to be given a million pounds…perhaps compass should waste people’s money and time by lobbying for that next?

I can’t remember when Petrobras was nationalised, but I would not be surprised if it was not under the dictatorship. There is nothing necessarily left or right wing about taking private companies into State ownership (Chile has a far larger private sector than Brazil, but it is also a far more equal society). There are also good and bad reasons for raising taxes. I am just not particularly convinced that this type of tax on this type of asset for this type of purpose is a good one.

1. In effect, reduces the amount you pay the energy companies for fuel.

2. However, you are still charged the samse, as the government gets even more tax from you than it is already doing, by grabbing what they said you overpaid the energy companies for themselves. To waste.

And if anyone expects fair and rational redistribution, just hark back to the recent 10p tax fiasco. Don’t expect anything sane, or even vaguely “fair” from them.

Um, way to go. And if water companies didn’t supply water we’d all be dead. Is that some excuse for them to charge sky-high prices? Not sure what point you are making, if any.

I’ve been addressing the one very basic point about the desirability or not of a windfall tax.

The desirability is there – its just your assumptions are misleading. A windfall tax isn’t about reducing prices for the long term, its about short term redistribution. No one has denied that. Over the long term, I agree we need better insulation, that energy pricing needs to be reformed etc.

John:
It’s better for the taxpayer to get 75% of ten billion quid in oil sales than 90% of five billion quid…

But no one said it should be permanently taxed at that higher rate. That jump in profits will not all go back into re-investment anyway.

Conor –
I live in a country where the main energy company, Petrobras, is nationalised. It is making massive profits at the moment and the argument is what to do with them.

And I agree we should have the same discussions here.

Centrica’s extraction arm sells the gas that it extracts from the North Sea at market prices. Some of it is sold to its own retail arm; some is sold to other energy suppliers. If it charged its retail arm less than the market price for this gas, it would get into trouble for dodgy accounting and tax evasion (as it would be transferring profit from the part of the business that’s taxed at 75% to the part of the business that’s taxed at 28%).

Centrica’s retail arm buys gas from Centrica’s extraction arm and from other gas extractors. It pays market prices for this. It then sells the gas to consumers. At the moment, it isn’t making very much money out of doing this, because the price it pays the gas extractors has risen much more than the price it charges consumers.

Yes, we could raise taxation on North Sea oil and gas extraction to more than 75%. However, this is where Tim Worstall’s original point comes in: the higher the tax we impose on this kind of project, the less willing companies will be to spend the large capital requirements needed to actually get the oil and gas out of the ground. It’s better for the taxpayer to get 75% of ten billion quid in oil sales than 90% of five billion quid…

The retail utility bit saw its profits fall by three quarters because, like the other utilities, its costs in buying energy have risen a lot, and its prices have only risen a bit.

The bloody great gas field bit saw its profits rise a lot – but these are already taxed at 75%.

Which is why the price suddenly started to ease when Brown declared a renewed effort to resolve political and security issues in the Niger delta (though whether he’ll do anything to back up his policy announcement is another matter).

Where production is nationalised this will obviously be less relevant, but Venezuela and Saudi Arabia etc will hardly be complaining.

The price rises were a result of the classic double-whammy – increased demand and greater threat to supply – when there wasn’t one happening then the other gave the price another push.

Now, who finances the commodity traders and is currently escaping all blame?

Oh, that would be the hedge funds and city brokerages. Off the top of my head, isn’t that Ashcroft, Duncan and Redwood?

I live in a country where the main energy company, Petrobras, is nationalised. It is making massive profits at the moment and the argument is what to do with them. A couple of years ago our neighbour, Bolivia, “nationalised” its oil reserves, which basically means that it seized the Brazilian-owned companies that had been extracting them. Brazil responded by saying that since it had made the investment it needed to be compensated for this.

But Brazil and Bolivia are both net energy exporters. Britain is a net energy importer. You already tax north sea oil revenue at 50%. There is not much left of this oil, but you want to levy a one-off levy tax on this and you are going to give away the proceeds of this to help people pay for their fuel bills. That just strikes me as being daft.

I agree that a windfall tax isn’t the answer, but I’m not sure the companies are as blameless as you’d make out by declaring they’d made a loss.

Incidentally, do people on here agree with what David Cox said today?