Oil Companies’ Tax Breaks: Why They Do Not Translate To Happy Oil & Gas Workers
North Sea oil producers have much to celebrate, following a cut in taxes worth £1.3 billion. As a response to industry pleas and the plunge in crude prices, UK chancellor George Osborne completely rolled back a tax hike he imposed in 2011.
This part of a rescue package was welcomed by UK operators that have been affected by the increasing tax burden. Now, they can finally see a reversal in the North Sea’s long-term decline.
While the oil industry benefited from tax breaks, offshore workers find little reason to join the revelry. As oil prices plunged at its lowest in the last 5 years, the supply continued to increase, while the demand continued to drop. This led to consumer benefits, but major losses in the energy industries. Despite the tax breaks, job cuts are still foreseen to continue, which means oil and gas workers are at risk of losing their jobs.
The North Sea has greatly suffered from plunging oil prices and hundreds of job cuts have already been announced. In fact, it was feared that investments would also drop, causing oil fields to be decommissioned faster than anyone predicted.
According to some offshore workers in Aberdeen, they would have to work an extra week for the same pay. This coincided with what Jake Molloy, regional organizer at the RMT Union, and who represents over 5000 North Sea workers, said. “Rig workers are being asked to work more hours for the same pay across the industry. Mr Osborne put a bundle of cash in big oil shareholder’s pockets…it’s a pretty disappointing day for the guys at the sharp end.”
Industry executives have informed Molloy to “expect more pay cuts and redundancies”. The oil services company Wood Group has also announced its intent to cut jobs. Its owner, Sir Ian Wood, has forecast that, in the next 18 months, up to 10,000 jobs could be lost.
This may contradict consultancy EY’s report last year that nearly 10 percent of UK offshore oil and gas jobs will be lost over the next five years, but the fact remains that workers have plenty of reasons to worry about.
George Baxter, a 65 year old oil worker, said that if he were still starting out, he would not choose a career in oil. “Say I was a young 20-year-old, I’d be thinking of an alternative in the energy sector. I think it has got to be windfarms, things like that, or fracking.”
As oil prices affect global company, problems in oil and gas jobs are also happening to the rest of the world. Thousands of energy workers in the U.S. have already been laid off, and from jobs that paid healthy wages. Due to depressed oil and natural gas prices, workers in Wyoming have also become redundant.
The situation continues to threaten the livelihoods of people that have been enjoying a previously booming oil and gas industry. Businesses are also at risk of closing since people who lose their jobs would rather not spend their money, as much as possible.
While consumers celebrate in the drop of oil prices, and companies revel in the tax breaks, more oil and gas workers are now unemployed. When this happens, they also lose access to the health benefits and other incentives that companies provide.
As one laid-off employee said, consumers don’t realize what is really going on and fails to see the bigger picture.