by Sue Thomas
You may have seen that George Osbournes’ 2012 Budget included a "major package of tax changes" to boost oil and gas extraction in the North Sea, along with a £3bn new field allowance west of Shetland.
In the energy industry, the debate over whether to invest in renewable energy or fossil fuels is always a point of controversy, (And that’s without throwing nuclear into the mix!) so it should come as no surprise that this policy has come under scrutiny.
In the UK, we’re the biggest consumers of gas in Europe and we import some of our gas in the form of LNG (liquefied natural gas) from as far afield as Egypt, Libya, Oman, Qatar and Malaysia, despite the fact that we extract gas closer to home in the North Sea and there’s more left to extract than we might think.
As well as natural gas, there’s also shale gas to consider.
Shale is a fine-grained sedimentary rock that contains pockets of methane gas. Global resources of shale gas outweigh conventional gas. However, shale is hugely controversial. Producing and extracting shale gas from the rock is a challenge, and there are questions over how safe it is.
To extract shale gas, engineers use drilling, controlled explosions, chemicals and large amounts of water to release the gas from the rock. There are concerns that the process can lead to earthquakes, contamination and also that the use of water for shale gas production may affect the availability of water for other uses. Shale gas extraction has been banned in several countries.
There could be as many as 200 trillion cubic feet of shale gas under the ground off the coast of Blackpool in Lancashire. Extraction could create around 5000 jobs in the area and give a whole new meaning to what we know as Blackpool rock! However, initial drilling caused two small earthquakes in the area, bringing home the potential dangers. (And yet another new meaning to Blackpool rock.)
What do you think of shale gas? Would you be happy if shale was being extracted where you live? Where do you think the UK should be focusing its budget when it comes to energy? Let us know in the comments.
This is not a blog post about magic, Houdini, David Copperfield, David Blaine or Derren Brown.
We’re talking about natural gas; the stuff you use for for heating your business, cooking or warming up your indoor employee swimming pool and jacuzzi. (That last one’s just wishful thinking...)
This blog post has nothing to do with David Copperfield. Image by Lloveras via Flickr.
New research from Ofgem has suggested that gas theft has cost customers around £140 million a year, because, yes, you’re paying for it through your domestic and business gas bills.
So how do you steal gas? Well, it could be by tampering with the gas meter or, even worse, by creating a spur onto a mains gas supply, cutting out the meter altogether. However it happens, it's illegal, not to mention very dangerous.
Yesterday Ofgem announced a new of gas theft regulatory framework in order to kick-start suppliers and network operators into tackling the issue. If you’re anything like me, you’re probably wondering why on earth they weren't tackling it anyway. The framework will include the development and introduction of:
- new enforceable obligations for energy suppliers on gas theft;
- a cross-industry theft risk assessment service to help target investigations bu suppliers;
- an incentive scheme to give suppliers new impetus to detect theft;
- an industry code of practice on conducting theft investigations.
Ofgem has also given the green light for a series of industry measures, including:
- a 24-hour theft hotline to report suspected theft;
- a stolen meters register to identify where meters have been illegally switched;
- a forum for sharing best practice between suppliers and better coordination with other agencies.
Now I doubt this issue will be resolved overnight or will ever be completely stamped out, but it certainly is a step in the right direction and I am sure you will agree that is a good thing.
(Here’s how they tackle a electricity theft in Brazil using smart meters, if you’re interested.)
As a business, we focus on generating real savings on your bottom line, so we thought it would make sense for us to give you a breakdown of how yesterday's Budget might have an impact your business.
Tax and VAT
Corporation tax to be reduced
Corporation tax will be reduced to 24% with the overall aim to reduce to 22% by 2014.
Simplified tax system
New simplified tax system for more than 3 million small businesses with an annual turnover of up to £77,000.
Higher rate reduction
From April 2013 the higher tax rate will be reduced from 50% to 45%.
Tax free allowance
The tax free allowance will increase to £8,105 this April and will rise to £9,205 next April.
Boost to business
Lower interest rates
Lower interest rates will be passed on to small businesses through the National Loan Guarantee Scheme.
Support for young entrepreneurs
The government is considering introducing Enterprise Loans to encourage business start-ups amongst young entrepreneurs.
Faster broadband connections
Ultra-fast broadband and wifi will be funded in ten of the UK’s largest cities.
Relaxed Sunday trading
Legislation to be introduced to relax Sunday trading laws for eight Sundays around the Olympics.
State pension age review
Automatic review of state pension age to ensure it keeps pace with increasing lifespans.
Higher rate relief
No change to pension relief for higher rate tax payers.
No change to fuel duty
No change to existing plans on fuel duty - the planned 3p rise in August will go ahead.
Vehicle excise duty
Vehicle excise duty to rise by inflation, but frozen for road hauliers.
So, in a nutshell this Budget has some good headline measures that will support business and growth, that is if you ignore the 3p rise in fuel duty. But let's face it,that isn't new news - we just hoped George Osbourne might have had the common sense to ease off a bit, inflation definitely going to be a concern now.
Let's just hope it's enough to keep the us safe from the double dip which is continuing to knock on the door.
- The draft Energy Bill: a five-minute summary
- 60% increase in business energy costs as average turnover falls by 6%
- Business week in brief: 11th May 2012
- Ed Miliband and the Queen talk energy
- Interview with Steve Fitzsimons of new business energy supplier, Hudson Energy
- Business week in brief: 4th May 2012
- The see saw of corporate profit
- Business week in brief: 27th April 2012
- EDF Energy’s Business Customer Commitments: four key pledges
- Businesses buck the trend when it comes to smaller energy suppliers