UK Oil And Gas Costs To Rise 100% If Brexit Fails

Yves here. The analysis this article relies upon makes an assumption which isn’t valid, although it may not make any difference in this particular case. Many pundits in the UK have repeatedly claimed that the UK can fall back to WTO rules in the event of a failure to reach a Brexit deal. As we wrote in March:

The Tories seemed unaware of the fact that there was no such thing as a “default to the WTO” if their Brexit talks founder, even though parties as remote as this site has flagged that as an impediment prior to the Brexit referendum. They government has apparently been trying to get some sort of special treatment from the WTO and not surprisingly isn’t getting much of anywhere. Apparently it’s news to them that the WTO operates by consensus, and with 162 members, that’s hard to achieve, and lacks any sort of established procedure for making decisions otherwise. And let us not forget that the WTO Director-General warned the UK several times before the vote that WTO deals take years to negotiate (as in typically more than five, and the approval process can easily take more than a year), that there were other countries in the pipeline and the UK would not be able to jump the queue. It’s not hard to imagine that new entrants who got in the hard way would not support the UK demanding all sorts of waivers.

The Director-General did say post Brexit that individual countries could elect to trade with the UK on a WTO terms, but I don’t see how that happens outside of bi-lateral trade deals, which would be even more cumbersome to negotiate. Perhaps some countries would be willing to trade with the UK on what would be close to a slap-dash-y basis, but the ones most willing to play fast and loose would be the ones with the most to gain.

By Irina Slav, a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry. Originally published at OilPrice

The UK’s embattled oil industry might have to tackle a twofold increase in trade costs if its separation from the European Union takes place under a no-deal scenario, an industry group has warned.

The warning comes just as the region’s oil and gas companies start to boost investments in the UK’s continental shelf, thanks to generous government incentives.

The UK government is attempting to negotiate a trade deal with the European Union, but optimism is fading as talks struggle to get off the ground. As Bloomberg noted earlier this week, after the end of yet another round of disappointing discussions, no government in Europe is willing to make concessions to London, as they have enough to deal with at home with populism on the rise and public opinion unlikely to hail any concessions to the British separatists.

EU leaders chose to begin trade deal negotiations with London in December, despite the latter’s insistence the talks begin this week. If the talks end unfavorably for the UK, Oil & Gas U.K. warned this week, the investment rush currently underway in the UK’s section of the North Sea would slow down to a trickle as the cost of labor and equipment jumps. This, the group said, will inevitably happen if the UK reverts to World Trade Organization rules in the absence of a trade agreement with the EU.

Earlier this year, Oil & Gas U.K. conducted a study of the potential effects of an unfavorable Brexit scenario on the oil and gas industry and found that it could see its cost of trade swell from the current $791 million (600 million pounds) to $1.45 billion (1.1 billion pounds). This is the cost on $97 billion (73 billion pounds) worth of annual trade in goods and services related to the oil industry.

For Oil & Gas U.K., this would be the worst-case scenario. While, theoretically, costs equaling one-tenth of turnover isn’t insurmountable for an industry, UK oil and gas is working in one of the highest-cost oil basins in the world. Operators there also face hundreds of millions in decommissioning costs and field depletion.

On the other hand, a recent Wood Mackenzie report found that the UK North Sea section has become the second hottest spot for deal making, after U.S. shale. Some oil majors have reduced their presence there, selling assets to independents who are eager to make the most of what oil remains in the North Sea, which isn’t an insubstantial amount. Others, namely French Total, have expanded their footprint through acquisitions.

There’s an ongoing cost-cutting drive among North Sea operators and it’s already paying off. In its Economic Report 2017, the UK’s Oil & Gas Authority said that operation costs per unit in the North Sea have fallen the most across all oil basins in the world. While this doesn’t mean that North Sea field operators can pump crude at Aramco’s production costs, it’s attractive enough to motivate further investment.

BP, for instance, has cut its production costs from $30 a barrel to about $15, and plans to further reduce this to less than $12 by 2020. Shell and other producers have managed to cut costs by as much as 60 percent.

So, there could be a silver lining in the threat of trade costs doubling for UK’s oil and gas players. It would motivate finding new ways to reduce costs and likely lead to faster adoption of the digital oilfield—it’s been hailed as a great cost-saver, after all.

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60 comments

  1. vlade

    But but but the oil is UK’s right? So it’s just getting it out of the ground, at no cost and will be a great export?

    This is the point I raised over and over – that apart from services, there’s few UK exports that do not have a large part of inputs priced in something else then sterling, hence sterling crash will do little good to UK’s exports.

    And services that the UK provides (financial, legal, consulting) are not massively price-sensitive, so it’s likely UK is selling as much of those as it already possibly can given the main capacity constraint there – people. And given that not a small part of those is likely to get out of the UK post Brexit (or even pre-Brexit), the capacity is more likely to shrink than expand.

    Reply
    1. Colonel Smithers

      Thank you, Vlade.

      Your last paragraph addresses something that I have been thinking about and talked about to a couple of consultants last week-end.

      Many of these services, called BS industries by the Guardian’s Larry Elliott, are staffed by non-Brits who can readily return home or go elsewhere and set up competitors, especially if local law specifies an EU(27) presence / entity and qualifications for trading. Also, the Brexit process is not doing the standing of the UK and its people any good. I know some people / institutions who are even more wary of employing Brits / British firms.

      As you said a couple of days ago, the jobs may go, but the staff may not go with them. A headhunter I know, formerly HQd in London, but now in Zug, says that local (EU27) regulators are not keen on monoglot Brits coming over.

      Reply
      1. cnchal

        Many of these services, called BS industries by the Guardian’s Larry Elliott . . .

        My guess is that Larry really means bullshit jawbs?

        Reply
        1. vlade

          different in my definition. BS industries get paid a lot for generating a lot of BS.

          BS jobs pay nada or close to, and treat the people who do them as BS.

          Reply
  2. Colonel Smithers

    Thank you, Yves.

    This post is timely and allows me to share some tidbits, gleaned over lunch yesterday, with friends / former colleagues working on Brexit in the City and at the Treasury.

    Hard Brexit is baked in, as stated by an executive board member of my TBTF employer at a conference in Paris a couple of days ago. Said exec is a former French and EU regulator.

    The Treasury official is working on two phases for Brexit, what can be salvaged for / from hard Brexit, essentially limited access to the market and some projects that don’t need EEA membership, and what are the industries that can survive / thrive after, basically financial services (especially asset management and money laundering), pharmaceuticals and specialist engineering. She did not say what will happen to other industries and their work forces. She compares the UK to a big Switzerland, but did not use the word “Britzerland”, a word that its 15 minutes half a dozen years ago after the Independent’s Hamish MacRae used it, and has engaged the Swiss government and business. I did not remind her that I have worked in Switzerland and don’t think that the UK’s infrastructure, skills base and all round competitiveness can match Heidi Country.

    Clive used the word “risible” to describe UK politics yesterday. From the accounts of dealings with politicians and the media, the term can be applied equally to the media. When the trio talk to the media, the level of dumbing down and emphasis on personality is astounding. These are the well paid and lubricated so and sos covering Brexit and, last Sunday, allowed a minister to claim that the UK can be self-sufficient in food and a leave campaigner to say that as the City is booming, the UK does not need a deal to prosper outside. We had three pints each. I can see why my dining companions needed the beer. So would any of us if we had to work with the Three Brexiteers and their disaster capitalism advisers. They were mightily grateful that Andrea Leadsom does not have a big job in government and Jacob Rees-Mogg is not in government.

    The trio have their Irish passports ready.

    Reply
    1. Colonel Smithers

      I forgot to add armaments and construction, including London bolt holes for foreign crooks, as the other industries for prioritisation / support.

      Reply
        1. PlutoniumKun

          Like many products, the supply chains for food, especially processed food, are orders of magnitude more complex than they were even 20 or 30 years ago. The horse meat scandal a few years ago showed just how deeply inmeshed the supply chains are all over Europe. A typical cheap burger from a London supermarket might have meat from animals from half a dozen European countries. I think it’ll be an absolute nightmare for suppliers and retailers.

          Reply
          1. Colonel Smithers

            Thank you, PK. Spot on as ever.

            It’s just as well that you aren’t a UK civil servant. The political masters aren’t interested in complexity and some, if not many, can’t understand complexity or see the need to employ / rely on experts. They spout “I want solutions” like their heroine Milksnatcher when talking about Lord Young of Graffham a generation ago. These solutions may just be better PR, not anything technical.

            On a related note, what do people on your side of the Irish Sea say about the surge in applications for Irish passports and the potential movement of people? Thank you.

            Reply
            1. PlutoniumKun

              I think the general reaction to the surge in Irish passport applications here is a mix of amusement and smugness. Its not been to an extent yet where I think people are getting alarmed by it.

              There is no evidence yet that I’m aware of that there will be a surge of people coming to Ireland, but I think it is likely that a lot of east Europeans who no longer feel welcome/lose their job in the UK may come to Ireland as the first stop in finding a new home. Given the huge disproportion in populations, even if, say, 10% of east Europeans in the UK together with a chunk of new Irish citizens decided to move in the run up to a hard Brexit, that would be maybe 3-400,000 people – a sudden 10% jump in the Irish population. Given the housing situation right now, that would be unsustainable.

              I don’t think this is a situation anyone has given any thought to yet, but I can see it becoming a very big issue. There is also, it must be said, the possibility of a surge of Northern Irelanders coming south for work if Brexit was to hit the NI economy badly, which seems a certainty.

              Reply
              1. makedoanmend

                There are many reasons, other than purely economic ones, of why people from the six counties move around all of Ireland. One doesn’t notice a terrible difference moving between Derry and Donegal, nor between Antrim and Cork for that matter. If the UK can’t produce a viable Brexit package that at least shores up the basic economy then we probably will see more people moving for purely economic reasons in the long term.

                As for passports, there was an interesting development in Scotland with regard to education. Scottish nationals and EU nationals can both avail of tuition reimbursement from the Scottish government but not other UK regions of the UK. A passport was proof enough of EU citizenship. It lead to some interesting student backgrounds claiming their Irish citizenship. However, I think they put a stop to this.

                Reply
          2. williamw

            I’m interested in this quote:
            “the supply chains for food, especially processed food, are orders of magnitude more complex than they were even 20 or 30 years ago”

            Do you have any evidence for that?

            Reply
      1. PlutoniumKun

        I think they’ll get a shock over armaments and construction. Armaments sales are determined as much by political considerations as the quality/cost of the weapons. The Gulf States in particular spread their sales around evenly to buy international allies, thats why most of them have a militarily incoherent mix of international sources. If the UK becomes just a weakened 51st State of the US, it will find I suspect that the wealthier weapons buyers will no longer have a need for British weaponry. States 1-50 will be more important politically.

        Much the same with construction. Iran is the big boom area for the major construction companies – and will closely be followed by Iraq/Syria if Isis are wiped out – all the contracts so far seem to be going to German and French companies for fairly obvious reasons. Major construction works are highly politicised in much of the developing world, its very hard to see Brexit as doing anything but weakening British firms in competition with European, US and Asian competitors.

        Reply
        1. Colonel Smithers

          Thank you, PK.

          Having worked at HSBC and Barclays, so both with colonial era footprints, it has been amazing to see how my German employer is taking business off them in what were considered their sunnier fiefdoms. This is not without (compliance etc.) concerns, but that’s for another thread.

          Reply
    2. Colonel Smithers

      The Treasury official kept saying how fiercely bright Boris Johnson is, which is often difficult to believe, and how the Tories badly need a person to emerge like Cameron a dozen years ago and unite around a project. The factions can’t unite around a leader from the current ministerial bench. She did say that, ideally, the new leader would not be an arrogant, if not upper class, so an so who ends up winding up the people / institutions the UK needs to come to terms with. None of us could think of that statesman or woman.

      Reply
      1. Anonymous2

        Johnson has a brain. You do not get to be a Brackenbury Scholar at Balliol without one. What he clearly lacks is either judgement or integrity. I think he has a screw loose. He is clearly madly ambitious but wildly opportunistic and seems to lack foresight or organisational ability. He is also very lazy – does not ‘do his boxes’ I hear, tries to ‘wing it’. Reports were that when he became Mayor he had no plan once elected. The Tories had to bring in Simon Milton to be Deputy Mayor, Chief of Staff and Head of Research. Milton ran the show behind the scenes while BJ did the PR.

        It’s great to be fiercely intelligent but when you are up against people who are both fiercely intelligent and very hard workers, the idler gets shown up.

        Max Hastings, who was his boss for many years, said BJ only tells the truth by accident, was a brutal buffoon and a dangerous adventurer. He advised that, if BJ ever got to No 10, the people should leave the UK.

        Reply
        1. Colonel Smithers

          Thank you.

          I had heard about the laziness and PR.

          Many, if not most people, would not know that Boris Bikes were an idea imported by his predecessor Ken Livingstone from Paris, where they are known as Velib. Johnson inherited many reforms / innovations and gets / takes the credit for them.

          Reply
      2. ChrisPacific

        I have read that smart people are actually capable of greater stupidity than dumb people in certain circumstances, because they overestimate their competence and generalize it into areas where it doesn’t apply. Put differently, it’s a lot harder to convince a smart person that they are wrong than a dumb one, even when it happens to be true.

        Reply
    3. Terry Flynn

      Thanks. As someone whose business covers clients worldwide (and indeed whose main potential – nominally Dutch – client deals with around 120 countries, thus by definition is used to dealing with “non-EU” countries) I’m personally not worried. But if things become an issue I’m entitled to Irish citizenship/passport and would, if necessary and if finances allow, pay what it takes to have an “Irish-EU presence”. But with the status quo, obviously other costs could wipe out export benefits I may make from a collapsed pound/euro rate.

      BTW if you feel able to meet in person (in London?) you’re one of the people I’d love to meet to get better insights. Easy to find me online but no pressure.

      Reply
      1. Colonel Smithers

        Thank you, Terry.

        I would be delighted and will google. Yves can always provide my private e-mail.

        I am in London all next month and until Christmas.

        Reply
        1. Terry Flynn

          great! My non-company email is all over the web anyway and is a gmail one entitled drterryflynn

          I’m having some issues with the company one – it’s also partly why I am having mod issues. Yves has been great in explaining to me what might be problematic at my end and being with a dynamic IP which clearly activates too many filters due to past issues so I’m really worried about my company losing contacts….no local IT person I trust to help out. Might just have to buy a static IP address from family ISP so I’m not messing about with VPN ones on opera to try to get things posted on here (and which doesn’t work for my main work email).

          Reply
          1. flora

            An aside : On email issue – possibly caught in DMARC limbo.

            In the past several years, numerous email service providers, including Google, Yahoo, AOL, Microsoft, and cable internet providers, have implemented a system called DMARC to help prevent spam and phishing emails. Unfortunately, this verification system can reject legitimate emails that are auto-forwarded through another account.

            Domain-based Message Authentication (DMARC) is an email authentication process designed to verify that emails are actually coming from the stated sender. If the sender cannot be verified by DMARC, the message may be rejected. This helps stop spam and phishing messages from reaching your inbox. For more detailed information, visit DMARC.org

            One problem: If email auto-forwarding is setup, a forwarded message’s original sender address may not match the address the email server sees on the incoming forwarded message. Message may be rejected.

            Reply
    4. larry

      I would be glad to meet up with you and Terry in London before Xmas. If you are interested. I am an MMTer just in case you wondered. I am well acquainted with your and Terry’s comments on NC. Yves can also give you my email address. Would be great if PK could make it to London.

      Clive is right. I have never seen such a group of incompetents as this lot. They seem to be incompetent at everything.

      Reply
        1. Terry Flynn

          I’d certainly like it – just see my caveat below – I’m a “everyone welcome” person but I’m aware that due to jobs/personal circumstances some might like to do smaller meetups to discuss individual topics – in which case I’m very happy to meet different people (particularly you) at different times, if not everyone feels “comfortable” chatting about their circumstances to a wider group. In any case these days I pretty much don’t care about my circumstances so I’m pretty open! But I suppose I need to be cognisant of other’s restrictions :-)

          Reply
      1. Terry Flynn

        I’m happy with more the merrier (and am v sympathetic to MMT but don’t find myself “good or quick-on-my-feet at arguing MMT”) but I am going to go by Col S and a couple of others who interact with us re BREXIT. So I’m not saying “no” by any means but I feel constrained to go with whatever people Col S “feel comfortable with” meeting. Which means I’m happy to meet “all as a group” or, if some want a little more privacy, meet individuals/small groups separately. In any case please know I’d really like to meet others in the flesh.

        Reply
          1. Terry Flynn

            great – I’ll check with yves about email addresses on basis of this thread.

            if she feels she can’t reveal them then I’ve given my Gmail and I’ll trust interested parties to contact me. then I’ll try to organise a London meet based on who has contacted me.

            Reply
            1. vlade

              am happy for Yves to share, or, we can separately email you and you can act as a hub? That may be gentler to Yves’ time..

              Reply
              1. Terry Flynn

                At the risk of people not seeing this as the thread has rapidly fallen out of the “recent” list I shall take responsibility for organising so need people to email my Gmail (drterryflynn).

                I’ll try to repeat to anyone who expressed interest but hasn’t emailed in any response to comments by them on more recent threads in a week(ish)

                Reply
  3. vlade

    As an aside – where exactly is the “No WTO” coming from? I had a look at the WTO’s web, and technically UK is a member, as is EU (this is explicitly stated on the WTO web – https://www.wto.org/english/thewto_e/countries_e/united_kingdom_e.htm, which says “All EU member States are WTO members, as is the EU (until 30 November 2009 known officially in the WTO as the European Communities for legal reasons) in its own right.”)

    There is a lot of things where EU automatically covers UK, but there are also UK specific issues (as apparently any EU state can do withing WTO).

    So the situation possibly can be more complicated, where UK will be one leg in, one leg out, as some WTO issues (including disputes) are covered by EU, which UK would lose coverage, and it’s not clear whether it could default to anything, but some are covered.

    Reply
    1. PlutoniumKun

      I’m confused by this too. I’ve read contradictory things on the precise legal status of the UK in the event of a hard and chaotic Brexit. Its not clear to me what the UK’s status is in the WHO, especially if the EU plays hardball and nix’s any attempt by the WTO to fudge things.

      Reply
      1. Terry Flynn

        Count me as confused too. I’ve seen both “WTO is for EU, not UK” and “UK is a sort-of member in its own right”. Maybe I’m a stupid optimist but I’d have thought full membership would either be automatic or without *too* much hassle….

        Reply
    1. Jack

      I believe Yves comment about the WTO referred to this in the article;
      “This, the group said, will inevitably happen if the UK reverts to World Trade Organization rules in the absence of a trade agreement with the EU.”

      Reply
    2. TroyMcClure

      “This, the group said, will inevitably happen if the UK reverts to World Trade Organization rules in the absence of a trade agreement with the EU.”

      This seemingly assumes an automatic fall back position to WTO rules for the U.K. after leaving the EU. Apparently there is no such automatic fall back,

      Reply
  4. john ollerenshaw

    Re;UK membership of the WTO,according to prof,Alan Winters,expert on UK tade policy we are a member but will need to submit our own schedule of tariffs and quotas.He doesn’t seem to think it should be too much of a problem.I found the whole of this discussion from the London Business School pretty good but the bit relevant to WTO membership starts at 1hr 10min 23,

    https://www.youtube.com/watch?v=XbJWWV2e_BQ

    Reply
    1. vlade

      That is consistent with the UK being a WTO member (as well as being a member of EU which is a member), but not covered by some parts where the coverage is implied by EU – cheers!

      Reply
      1. Terry Flynn

        Hmm, this is where I get totally lost and if I ever get the dosh to do a repeat survey I’d need your knowledge! My models are good but still, GIGO – garbage in garbage out – I’d need respondents to know exactly what it entails to “default” to WTO status.

        Reply
        1. Anonymous2

          Richard North has also gone into this subject. His argument IIRC is that although there is formally a requirement for consensus in the WTO compliance procedures are very weak so countries can get away with a lot in practice given that the culture is very permissive. IIRC he claims that the EU has been operating on outdated schedules for years without encountering problems. I am no expert so have no view whether he is right or wrong. His written material comes across as the product of a serious writer so I would not be inclined to dismiss him out of hand.

          Reply
  5. JustAnObserver

    One question that’s been rising in my mind as I watch the appalling behaviour & incompetence beyond what I thought possible. In the event of a hard, no-deal-at-all, sudden Brexit what actually happens on 00.00UTC April 1, 2017 ?

    Among many others …

    o All financial transactions between UK & EU27 just stop dead ?

    o All freight traffic through e.g. Dover or the Chunnel just stops ? And across the NI border (except the smugglers of course).

    o All intraEU flights to/from UK airports are grounded ?
    (Dept. of small mercies: Michael O’Leary gets a well deserved kick in the b******s).

    o Etc.

    Though it appears to be deep in tinfoil hat country this seems to be what I’m forced to conclude from what I’ve read here at NC – both posts & commenters.

    Reply
    1. vlade

      1) No. SWIFT is not EU based, and I expect most of the banks already have, or will have EU based offices to conduct EUR payments. Now, other things may be way different, especially a swathe of derivatives (not only EUR..)
      2) Yes. That is, unless the UK gets their customs systems sorted in time, and the UK/EU builds the appropriate infrastructure.
      3) Not all, but a lot. That said, Ryanair’s plan is that unless the deal is done by Dec 2018, it’s going to cancel all flight from the UK for April/May and move capacity to Europe. Wheteher it’s a realistic plan is a different problem (you can dump so many planes on most European airports on a short notice, airports plan about 6 months in advance IIRC). Easyjet likely hit worse than Ryanair, BA is an interesting case where the owner is actually Spanish, so it may be able to still fly (and charge even more extraorbitant fees). But, if say EU will go and requests passenger info ala US, all is grounded.
      4) fishing in disputed waters will be fun (North Sea in particular), but it may not matter as
      5) all agri export from the UK is dead (well, it’s dead anyways, except maybe for strawberries, but you get what I mean).
      6) a lot of companies (engineering, architects, medical research etc.) doing business in EU will have to terminate the projects, unless they created offices in EU and manage to transfer the contracts to them (which they may not be able to, for a host of reasons, including but not limited client not agreeing to it).
      7) unless an emergency legislatin is passed by the UK, NHS grinds to halt as the doctors and nurses lose the qualifications, opening NHS to massive lawsuits if anything goes even remotely wrong.
      and I could go on and on, but I will end on a happier notes
      8) a number of hedgies will pocket massive payouts
      9) a number of disaster funds will start looking at buying UK assets’s on cheap

      Reply
    1. Yves Smith Post author

      Thanks for stepping up and filling in the information gap. I am on the road and probably should have provided the quotes from the Director-General of the WTO.

      Reply
    2. PlutoniumKun

      Thanks, that does clarify things a little bit.

      What that article doesn’t mention, but I assume is on everyones mind, is that it would seem like the EU would have something of an unofficial veto (i.e. it could make life very difficult for the UK in negotiating terms), so if the UK refused to pay its severance….

      Reply
      1. vlade

        The article is really good, as it clarifies the member but.. position. I.e. yes, UK would retain WTO membership, but unless it was willing to go tarriff – and more importantly, subsidy – free, it would still have to spend a lot of time negotiation any schedules, which, unless it wanted to use “its” share of EU allowances, would also mean negotiating with EU (and a lot of other parties).

        While I can imagine the UK govt dropping all tarriffs, if it was to drop the agri subsidies, which it already promised to the farmers to keep at the EU CAP level until the next elections at least. Given that I saw somewhere that the Welsh farmers would have 10k income drop if all subsidies were removed – and that’s from 14k/annual base (to effectively 4k), which is half of the UK median and barely over minimum wages, I can see how well that would go with farmers.

        Not to mention that subsidies are a large part of income of the “farmers” like Prince Charles and I’m sure Colonel can give other examples. Who, while technically having only a single vote, are probably somewhat more influencial with a Tory govt than all Welsh farmers put together.

        Reply
        1. PlutoniumKun

          Yeah, it seems whatever way the UK turns, farmers will be the ones to be sacrificed. Most the key players outside the EU (especially the US, South America, Oz and NZ) will pretty much insist on agriculture access to UK markets, which means an elimination of domestic subsidies. Given that in general farmers voted for Brexit, its hard to have too much sympathy. A friend lives in northern England in a mostly sheep rearing area, he said all his farmer friends voted Brexit for reasons none of them could give a coherent explanation. It will be the biggest change in British agriculture since the Corn Laws. And it will happen virtually overnight.

          Reply
          1. vlade

            Hey, maybe they can hope for that 350/week that NHS will get, as it may, just may, allow NHS to provide a more of what one could call mental health care. Because a lot of those farmers will, ex subsidies, surely need it..

            Reply
  6. rtah100

    Yves, the headline is cheap clickbait and unworthy of you. It suggests consumers’ bills would rise when it is just production costs.

    Also, I don’t understand why WTO rules necessarily push up the cost of imported services and goods. We can set tariffs at zero if we have the will.

    This seems one of your weaker Brexit pieces.

    Reply
    1. PlutoniumKun

      The headline is from Oil Price, which is an industry website, in that context the term ‘costs’ are clear, its costs to the industry.

      If you follow the links you will see that the costs are not just for tariffs. And no, you can’t just set tariffs at zero if WTO rules state otherwise, because suppliers who believe this to be discriminatory against them can take legal action. Tarriff rates are never set in isolation, they are part of complex give and take negotiations.

      Reply
  7. rtah100

    Thank you for pointing me to the article because it just confirms how hysterical the reporting is. The specific costs in question in providing UK oil services may double from 600m to 1200m on total exports of 70,000m! So 1% of revenue increase. And suggesting we infer the meaning of the title from the source, not given in the links header, is uncharacteristic of NC’s straight reporting.

    Reply

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