North Sea Oil & Gas

 There is a discussion taking place about exploitation in the North Sea and whether the UK government should give permission. The reasons agains are clear, any further development will add to global warming. The argument against says that the developments will create jobs, reduce the UK's reliance on foreign sources and bring down resources.

The last two arguments are rather questionable. As I understand the situation any one producing the gas and oil can sell at world market prices and is there any restriction on who they can sell the oil or gas to. So if someone makes a offer above global prices what happens.

If the country was really serious about the cost then the licences should only be granted on two condition. The first being that the UK has total control over where the oil and gas go. even more important must be the price. If they are only sold at world prices than the UK consumer has no benefit of chaeper prices because it is UK oil and gas.  So the second and most important condition would be a variation on a fixed price contract. That is the oil and gas would be sold at a price negotiated with he government, perhaps fixed at the level preceding the invasion of Ukraine or at world prices whichever is lower. 

This would obviously restrict the profit and presumably to taxes that the government would get but if properly implemented could lead to significantly  lower prices for the UK consumer and thus lower the cost of living.

Let be clear I am not an expert in the way prices paid at the petrol pump and by the energy industry are calculated and regulated so this is a broad outline of a plan . It would need to be carefully pl;anned as private industry is very adept at looking and using loopholes. It might even be that the companies would not with to do the extraction with these conditions but when they first started oil prices were much lower so there would still be a sizeable profit, just not gargantuan!

Nigel Farage and 5 million pounds

 For some time I have wanted to write about the different value money has to different people. My work with Norwich Credit Union made it very clear that people have no concept of how much others earn and why £5 can be a lot of money to some whist £5 million or almost trivial to some. Most people in Britain are somewhere in the middle. 

The fact that Nigel Farage was given five million pounds should seem like a huge amount of money to many people. If you earned £50 thousand  a ear it would take 100 years to earn 5 million. How many of Nigel Farage's constituents earn even £30 thousand a year. Why does Christopher Harborne want to give so much money to  Nigel Farage. Recall this was not a gift to Reform, the political party, but a personal gift to one man, a gift he does not have to pay tax on. So Farage has just been given the equivalent to a hundred years salary at a not unreasonable wage.

This leads to the question of why Mr Harborne would give away this apparently large some of money. According to Wikipedia he is worth over £18 billion. This means that Harborne has given away less that 0.00001% of his wealth. So presumably he wouldn't even notice.For some earning £50,000 that is less that £15, a couple of pints in a London pub. So what does Harborne get for his money?

Notice that he didn't give the money to the Reform party so it is not just about politics. So why would Harborne, who lives in Thailand but maintains a house in the UK so he can donate money to political parties, want for his money. Why make it a personal gift, is he keeping Farage as his own personal poodle. A well trained dog who rolls over and has his tummy tickled as a reward for performing some trick at his maters request. Or perhaps the treat is just another million somehow gifted to Farage. 

One conclusion from that story is that Farage cannot be trusted, he will jump whichever way his master commands.  The other is that most economics does not seem to understand that £5 million is an enormous sum to some and trivial to others. This should really have an enormous impact on the way politicians and economists see the way taxation and benefits affect different people.

Swiss Gnomes

    I am old enough to remember when countries were held to account by the "Gnomes of Zurich". If they weren't happy the country went bust!  Now it seems to be the "markets". The investors who buy Greek or Italian bonds charge interest, presumably they charge interest because there is a risk if they underestimated the risk they is the penalty and market discipline says that you go under.  But not for the lords of the finance houses, not only do they pocket the profits, they pass the losses onto the people whilst keeping the profits to themselves, a great we win you lose game.

  But what are the European politicians playing at? The Greek economy is about 5% of the EC, so if the EC wants to bail Greece out there is no difficulty but of course the Greeks are the undeserving poor and they must be punished. An effective solution might be to pay off the Greek debt and then throw them out of the Euro, this would mean they could devalue  and get their economy up to strength. All those form rich Europe could pour in and go on holiday.  This would give the Greeks a chance to sort themselves out. One of their problems, as with Italy, is the large size of the black economy with people using cash and avoiding paying tax. That will not be changed overnight so the austerity measures might keep the "markets" happy briefly it will have no long term impact. Just remember it took the second world war to get Britain out of the effects of the great depression, not sure anyone wishes to repeat the exercise!