(Bloomberg) – U.S. President Donald Trump criticized the UK’s approach to taxing North Sea oil and gas, saying it discouraged drilling and raised energy prices.
Britain should stop using “costly and unsightly windmills” and “incentivize modernized drilling in the North Sea where large amounts of oil lay waiting to be taken,” Trump said in a post on his Truth Social network on Friday. “A century of drilling left, with Aberdeen as the hub. The old-fashioned tax system disincentivizes drilling, rather than the opposite.”
It’s not the first time Trump has criticized the energy policy of Prime Minister Keir Starmer. Earlier this year, the U.S. president called UK’s windfall tax on the oil and gas industry “a big mistake” and urged the British government to “open up the North Sea.”
The post on Truth Social came a few hours after Reform UK, a right-wing party whose leader Nigel Farage is a longtime supporter of Trump, was reported by the Financial Times to be trying to woo oil and gas companies with the promise of lower North Sea taxes.
In its first budget last year, Starmer’s government raised the windfall tax on oil and gas producers, which was first introduced by the prior Conservative government in 2022. The increase brought the headline tax rate for the North Sea to 78% and extended the levy until March 2030. That prompted an outcry from the industry, which said the region had become less attractive than other parts of the world for investment.
The UK’s oil and gas output has been in decline for two decades, with output reaching a new low last year, according to official figures. The country’s largest producers have regularly bemoaned the high taxes, uncertainty created by regular changes to the fiscal regime, and the government’s pledge not to issue new exploration licenses.
Earlier this month, Harbour Energy Plc began a review of its UK operations that it expects to result in about 250 job cuts. Government policy is accelerating the collapse of the industry, according to oil services provider Hunting Plc. However, the North Sea oil and gas regulator raised its forecasts for investment and production in the coming years after 2024 figures were higher than expected.
The UK government says existing North Sea fields should be used for their lifetime because oil and gas will have a big role in the country’s energy mix for many years to come, but it’s vital to transition to cleaner forms of energy to achieve net zero pledges. It has been engaging with oil and gas companies and other stakeholders about the future of the North Sea, and what should replace the windfall tax.
