Britain’s “common good” Conservative Party is not known for its understanding of basic economics, as its recent plans to encourage “voluntary” price caps on certain food products have already reminded us.

Another Tory folly was the introduction of a windfall tax on oil and gas companies. The tax was going to be a one-off at 25 percent. It was then increased to a one-off levied at 35 percent and extended for three additional years. … The Daily Telegraph’s Matthew Lynn takes up the story:

It turned out that all the people warning that it would be unwise to slay a golden goose were right. Investment in the North Sea has plummeted. The French energy giant Total became the first major company to pull out of the sector, followed by Chevron, and then Shell.

OEUK, the trade body for large and diversified energy companies, suggested 90pc of firms were looking to scale down investment. The largest energy producer in the North Sea, Harbour, has been shedding hundreds of jobs, after the company claimed its tax bill, which includes the levy, “all but wiped out” profits last year.

[More at the link. Price caps always result in shortages, as they inevitably make production costs outstrip any return on investment. Taxes always act as disincentives, especially when targeted at investments. The ROI span for oil and nat-gas is so long that even signaling such policies puts a dampening effect on investment. Why this surprises anyone is impossible to imagine; one suspects that the economic sabotage is deliberate in such cases now. — Ed]