Aberdeen/shire house prices

donaldtramp

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article5712198.ece

February 12, 2009


Oil industry needs tax breaks to avert slump



Carl Mortished, World Business Editor


div#related-article-links p a, div#related-article-links p a:visited {color:#06c;}The UK oil industry has asked the Government for tax breaks to prevent a collapse in drilling activity in the North Sea that could lead to the loss of up to 50,000 jobs in Britain.
Oil industry lobbyists have met Ed Miliband, the Energy Secretary, to alert the Government to the likelihood of a sharp fall in North Sea investment this year because of the collapse in the oil price and a lack of funding from banks for offshore projects.
Figures from Oil & Gas UK, the North Sea industry association, suggest that the number of wells drilled in the North Sea could be a third of last year's total of 109. The association said: “A year ago, it was anticipated that up to 113 wells could be drilled in 2009, whereas the latest survey predicts 77 wells, of which only 34 have a committed drilling rig.”
Malcolm Webb, the association's chief executive, fears that the fall in the oil price, the lack of funding and high taxes will lead to a halving of investment from last year's £5 billion. He said: “There are about 20,000 jobs relying on each billion pounds of capital expenditure. That's about 50,000 jobs [potentially at risk] in the North Sea and the supply chain.”
Related Links

• North Sea oil producer up for sale

• Miliband failing market, say energy bosses

• Tax break may pay, on a crude calculation

In a meeting with Mr Miliband, the association asked the Government for help in improving the flow of bank capital to exploration companies and for changes to the tax system that would let smaller operators benefit more quickly from tax losses incurred on North Sea investments.
Mr Webb said that the oil industry wanted Britain to emulate Norway's tax system, which provides generous capital allowances that favour high levels of exploration investment.
The credit drought is hitting Britain's North Sea oil industry, in which much of the new exploration is driven by smaller operators. According to Oil & Gas UK, the industry is targeting reserves of just under 10 billion barrels with 56 new field developments, but half contain less than 15 million barrels, quantities that are too small to interest big groups such as BP or Shell. Instead, the Government has encouraged an influx of smaller players, many from North America, and these are suffering from lack of finance.
The sudden fall in the oil price from last year's peak of $147 a barrel to $44 for Brent crude has wrecked the economics of most North Sea investment, according to Mike Tholen, economics director for Oil & Gas UK. He said: “The breakeven oil price for new field investment is now over $40 per barrel. Only a third of new developments now under consideration break even at current costs and at a $50 oil price.”
Meanwhile, the cost of operating on the UK Continental Shelf has risen sharply. Although commodity costs, such as steel prices, are expected to fall this year, the cost of labour is unlikely to come down quickly.
The day-to-day operating cost of producing a barrel of oil in the UK is $13, while the capital investment required averages $16 a barrel. Add exploration costs, funding costs and corporate overheads and the cost of a UK barrel of oil is $40 to $50, which is uncompetitive when tax rates for oil companies are 50 to 75 per cent. North Sea oil companies paid the Exchequer about £13 billion last year. Mr Webb said: “We are very hopeful we will hear something in the Government's Budget.”
North Sea investment has been falling from a peak of £5.6 billion in 2006 to £4.8 billion last year despite oil prices rising in that period. Mr Webb says UK investment must be £5 billion a year if the decline in UK oil output, currently 5 per cent a year, is not to accelerate.

donaldtramp

As for all the talk about renewable energy "hubs" that is all it is, talk. The politicians are talking a good game but there is absolutely no renewable energy comapnies in Aberdeen that I have heard off.

Trust me when this oil runs out, (a geological certainty) Aberdeen is goosed.

IveSeenTheLight

donaldtramp wrote: »

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article5712198.ece

Come on now donald, please do not show such ignorance.
You will know full well as you say you have worked in the oil industry for many years that this is a regular issue raised by the operators when oil is seen to be at a low price.

The pressure the operators try to put on the government to reduce taxes is not uncomman and is not linked to the current credit crunch.
It's just standard politics when the oil price is at a certain level.

What the operators are hoping for is that the current economic climate gives them extra leverage.

We even discussed in this thread
http://forums.moneysavingexpert.com/showthread.html?t=1482461

mitchaa

donaldtramp wrote: »

Trust me when this oil runs out, (a geological certainty) Aberdeen is goosed.

When the oil eventually runs out in the N.Sea i doubt any of us on here will be alive to see it and when it does, Aberdeen will be no different to any other UK city who does not have oil.

Been through this 1 before DT;)

donaldtramp

Come on now donald, please do not show such ignorance.

Ignorance?:rolleyes: I get the feeling Seen the light, that you don't have a job in the Oil industry and just search for quotes and links to prove something that you know very little about.

You will know full well as you say you have worked in the oil industry for many years that this is a regular issue raised by the operators when oil is seen to be at a low price.

I agree that it happens. But I also know there are a lot of supply companies losing a lot of money just now. They won't stand for it people will lose their jobs.

Off the top of my head,

• Wood group have cut all there contractors wages,
• Talisman have let theirs go!
• Baker Hughes, Sclumberger and BJ Services all letting staff go....

http://www.reuters.com/article/rbssEnergyNews/idUSN2745015220090127
Those job losses AREN'T a ploy to get the government to cut taxes are they???

As for the assertion (in the other thread) that Oil companies can make money at 13 bucks a barrel, I can absolutely, positively, tell you, that statement is NONSENSE!

The pressure the operators try to put on the government to reduce taxes is not uncomman and is not linked to the current credit crunch.

Not linked to the credit crunch?:rotfl: Do you understand basic economics?

Mitch, I've also been through this before and I think that (probably later this year) Oil prices will go back up again. I think there will be a lot of dross shaken out first though.
But if you have a young family I really do think you are living in a bubble if you think Oil production is going to see us out in the North Sea. Maybe I'm a bit younger than you but I know it isn't going to see me out and I'll make my exit at the correct time. I do think it will be 10 or 15 years away, but it will happen. It is shown in the official report on the industries future I posted up earlier in the thread.
It matters not a jot what the oil price does if we don't have any Oil/Gas to produce, as predicted in the report.

Mitch, name something else that Aberdeen manufactures/sells/trades in just now apart from the Oil. There is nothing.

My thoughts anyway!
Cheers

ad9898_3

mitchaa wrote: »

When the oil eventually runs out in the N.Sea i doubt any of us on here will be alive to see it and when it does, Aberdeen will be no different to any other UK city who does not have oil.

Been through this 1 before DT;)

Although I don't blame you for saying what you have said here mitchaa as it's typical of the human psychy, it's precisely this kind of attitude that will return us to the dark ages as we slip off the plateau of peak oil (which we are on now) and down the other side of Hubbert's curve.

It's not going to happen tomorrow so who cares ??, well one day tomorrow will be upon us, and it's much much closer than the general public think.

donaldtramp

Front Page, main article, Press and Journal today.....

http://www.pressandjournal.co.uk/Article.aspx/1062778/

From the head of the Aberdeen Solicitors Property Centre, no less.

I think he has put in the last paragrapgh as a warning especially for you Mitch!!!

Hows the bubble guys? Still intact?


Friday 13 February 2009

dreadful property slump may get worse – warning

North-east house sales dire, says ASPC chief



By Ryan Crighton
Published: 13/02/2009

John MacRae

A leading north-east property solicitor has admitted that house sales in the region are “dire” – a week after saying the market was “enduring the recession comparatively well”.
The credit crunch, recession and introduction of home reports have sent sales in Aberdeen and Aberdeenshire to their lowest levels since the early-90s, the Press and Journal can reveal.
Last week Aberdeen Solicitors Property Centre (ASPC) chairman John MacRae said despite concerns about sales prices were holding up well.
However, last night he said sales at the end of last year and in 2009 had been dreadful and could get worse before the summer.
The average price of a property in the north-east, at £192,570, has risen above the UK average in recent weeks. But lurking behind that is a startling drop in sales which, for the first time in 15 years, have fallen below 1,000 for a single quarter.
Last night, Aberdeen University property expert John Bone warned that the unprecedented boom in the north-east housing market, fuelled by cheap credit, had ended and prices were on the verge of plummeting.
He said: “Figures from ASPC indicate that the local market has now entered a significant downturn, with sales over the last six months falling off dramatically, both from the peak of the market and from the longer-term trend.”
Between October and December 2007, solicitors within ASPC shifted 1,662 homes. However, during the same period in 2008, just 894 were sold, a 46% drop.
This is the first time since the early-90s that sales have dropped below 1,000 in any quarter, sparking claims that the north-east market is on the verge of a major decline.
Last night, Mr MacRae said the market was being hit with a triple blow and might not pick up until the summer.
“It’s either the credit crunch, or the recession, or the introduction of home reports,” he said.
“All three are having an impact and it’s not yet clear which is causing the most problems. The impact of home reports may be temporary as people get used to them.”
He added: “It’s pretty dire at the moment and it looks like it’s going to be worse in the first quarter of this year. This is because there was a surge in properties coming on the market before the home reports came in (in December) and a dearth since.”
Mr Bone warned that falling sales are a good indicator that prices are set to fall significantly.
He continued: “It is far from unusual, as has already been experienced across other regions of the UK, for there to be an extended period of price stagnation or slight decline before contracting sales and a slowing market are translated into more significant price falls.
“This occurs as sellers in a downturn are understandably reluctant to lower asking prices, and initially attempt to hold out for peak prices prior to eventually accepting that conditions have changed.
“Furthermore, Scotland, and indeed the Grampian area, appeared to lag behind the rest of the UK in terms of the initial upturn in prices and, consequently, there are good grounds for assuming that something similar is occurring with the correction.
“In addition, the oil sector – which is often cited as a key reason for higher prices in this area – now appears to be experiencing its own difficulties due to wider economic conditions.
“Against this background, observations that the local area is ‘bucking the trend’ and that average prices in the region are now above the UK average should be regarded with considerable caution.”

mitchaa

donaldtramp wrote: »

Front Page, main article, Press and Journal today.....

http://www.pressandjournal.co.uk/Article.aspx/1062778/

From the head of the Aberdeen Solicitors Property Centre, no less.

I think he has put in the last paragrapgh as a warning especially for you Mitch!!!

Hows the bubble guys? Still intact?


Friday 13 February 2009

Low volume of sales, as to be expected.

Not helped by this hope report nonsense that was implemented in Dec.

donaldtramp

Low volume of sales, as to be expected.

Have a look at the latest report from ASPC page 3. The number of house sales is falling off a cliff! It looks much worse when you compare it to same period last year.

As the number of house price sales fall people will have no option except reduce their prices, that is, if they want a sale.... They can on the other hand hold out (as a lot of numpties are doing) for the price they THINK their house is worth.

http://www.aspc.co.uk/Documents/HousePrices-2008Q4.pdf

I still stand by my thoughts. For the short to medium term house prices for Aberdeen/shire are on a shoogly nail and long term it looks real bad.

IveSeenTheLight

donaldtramp wrote: »

Ignorance?:rolleyes: I get the feeling Seen the light, that you don't have a job in the Oil industry and just search for quotes and links to prove something that you know very little about.

I can assure you I am in the Oil and Gas industry, currently assigned overseas due to my extensive knowledge.
Overseas assignments and work arranged from a base in Aberdeen is a growing factor you regularly discount when discussing Aberdeeen and the Oil industry.

Why would I Troll specifically about Oil and Gas if it I had no vested interest in that market?

donaldtramp wrote: »

Quote:
You will know full well as you say you have worked in the oil industry for many years that this is a regular issue raised by the operators when oil is seen to be at a low price.
I agree that it happens.

You agree that it happens, Therefore you know it happened before and is not as a direct result of the credit crunch, its a direct result of a low oil price.

P.S. your agreeing with me yet I know very little about the oil industry above

donaldtramp wrote: »

Quote:
The pressure the operators try to put on the government to reduce taxes is not uncomman and is not linked to the current credit crunch.
Not linked to the credit crunch?:rotfl: Do you understand basic economics?

You agree that it happened previously and then seem to iterate its a result of the credit crunch

Once again, its a result of the low oil price and will happen again in the future despite the liquidity of credit. The operators are trying to protect their profit by getting taxes reduced

As for the P&J report, agreed it is saying that sales are dropping and potentially this will cause prices to drop, however in the report it clearly says there is less supply due to the introduction of home reports

donaldtramp wrote: »

This is because there was a surge in properties coming on the market before the home reports came in (in December) and a dearth since.”

Naturally, if there is less supply, then this can affect sales
Demand is down, but so is supply.

I'm not denying that Aberdeen properties could go down in price.
I doubt to the levels that some think though

Wages in Aberdeen are a reported 1/3 higher than the UK average.