DAILY UK oil revenues have fallen by more than 80% in real terms from their 1980s peak, writes Christopher Sims.
Revenues in the month averaged #20.5m per day, which compared with the peak of #118.5m, in 1998 prices, recorded in February 1985, according to the latest Royal Bank of
Scotland Oil and Gas Index.
The March average was the lowest recorded since the index began 15 years ago.
Stephen Boyle, head of
Business Economics at the Royal Bank, said that the existence of a lower revenue environment than in the 1980s was nothing new but the data showed three things.
''There is a continuing need to drive down costs if the UK
Continental Shelf is to remain competitive; Government revenues from the industry will be depressed this year; and the value of exports will fall with consequent effects for the balance of payments,'' he stated.
Oil output at 2.5 million barrels a day over the past year is only 3.8% down on the peak, but the price it fetches is much lower.
Then Brent blend was #25 per barrel or the equivalent of #43.11 in 1998 money.
It is 82% down on this amount, additionally affected by a higher level for sterling on the dollar compared to 1985.
Compared to March last year, revenues were down 34%, the lowest in cash terms since 1993. In March 1998, Brent fell below $13 for a time and averaged $13.17.
Production of oil and gas was 1.4% higher on an annual basis. Oil production was down 0.5%, with the oil index standing at 156.9, while gas output rose by 4.4%. The gas index was 288.3. The
combined index stood at 191.9.
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