The Oil Drum

This is a guest post from Richard Griffiths.

http://www.aph.gov.au/Senate/committee/economics_ctte/excise_bills_08/index.htm

Long-Term Petroleum Decline

The requirement for taxation of oil and condensate production in Australian territory should be seen in the context of the long-term decline of total oil production from a peak in 2000 (ASPO-Australia 2006:2).

In this context, oil represents a unique natural windfall in the history of Australia. The opportunities presented now will never be repeated. For Australia, oil is not a 'once-in-a-lifetime' event, but a once-in-a-civilisation event. Given the huge amounts of money involved in the sale of Australian oil and oil products, it makes sense to consider the inter-generational equity of the present opportunity. How, if at all, will future generations of Australians benefit from the wealth produced in these few decades?

The crude oil excise regime established by the Whitlam government in the 1970s recognised the need to capture some of the benefits of oil production for the wider community, including future Australians. We are now experiencing some of the benefits of that decision. However, there is a strong case to be made for closing loopholes in the existing framework, so that this value capture can be effected efficiently and comprehensively. There is no strong argument for exemption other than the usual one - that no-one likes to be taxed.