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Houston Chronicle: Shell CEO Urges Britain to Cut Oil Taxes

Feb. 13, 2006, 6:38AM
© 2006 The Associated Press
AMSTERDAM, Netherlands — Britain's government should lower taxes on domestic oil producers if oil prices fall, in order to increase investment in North Sea drilling projects, Royal Dutch Shell PLC's chief executive said Monday.
Britain's Treasury chief Gordon Brown doubled a “windfall” tax on oil production in the British North Sea from 10 percent to 20 percent in 2006, bringing protests from oil companies and free market advocates.
“If oil prices fall we'd like to see taxes fall,” Shell Chief Executive Jeroen van der Veer said, Dow Jones newswires reported. “That may be enough for additional investment in the North Sea.”
Van der Veer was speaking at an energy conference alongside Britain's Energy Minister Malcolm Wicks.
Last week, the Hague-based company reported a 37 percent increase in full year earnings to US$25.3 billion (euro20.8 billion), a record for any British or Dutch corporation. The earnings also brought complaints from consumer groups that the company is profiteering on the current high price of oil. Shell denies that.
Industry observers say the British taxes will lead Shell and other offshore drillers to shift their investment projects away from the North Sea to other areas where taxes are lower and profits higher _ costing British jobs.
The U.S. government has debated windfall oil taxes but rejected them until now.
Free-market advocates like think-tank The Cato Institute have argued that such taxes distort market forces and discourage the investment that is needed to create new projects that will ultimately bring prices of gasoline at the pump down.

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