Expert: North Sea ruin claims by the oil industry are 'ludicrous'

A leading economist has labelled the oil industry's suggestion that tax rises will shut down the North Sea as "silly".

Writing for the Daily Telegraph, Andrew Lilico, an economist with Europe Economics and a member of the Shadow Monetary Policy Committee, said that although he would not have introduced the North Sea surcharge to fund the fair fuel stabiliser, it will not ruin the oil industry.

His comments follow clashed between the oil industry and energy secretary Chris Huhne, during which the Oil & Gas UK lobby group said that the increase in taxes would chase away investments and jobs.

However, Mr Lilico has dismissed these suggestions that oil companies would invest in $50 (£29.98) per barrel with tax at 20 per cent but not in $100 per barrel at 32 per cent tax as "ludicrous".

"If these oil prices persist [$100 per barrel], there is going to be enormously more investment in the North Sea, not less, because it will be profitable to extract oil from many otherwise-marginal field," he explained.