James Moore: North Sea oil in need of consolidation

Outlook More evidence for those arguing that it's time to cut the burden of tax on companies seeking to exploit the sizeable reservoir of oil that still remains in the North Sea. Deloitte says production in our part is down by 35 per cent this year. Bad enough, you might think, but when compared to the 18 per cent rise from Norwegian territorial waters it is appalling.

The issue of taxation needs to be addressed. With a frightening-looking budget deficit to deal with, cutting the burden on oil barons looks on the face of it to be politically suicidal. But this is an area where a sizeable tax cut would ultimately benefit the Exchequer by raising the overall volume of production and thus producing more revenue for all.

It's not just the taxation issue, though. In Norway, sizeable players are at work, not least the state controlled Statoil. In UK, the situation is different, dominated by any number of small operations ekeing out an existence at the fag end of the Alternative Investment Market. Such a structure is inefficient.

I'm not arguing for the British state to get involved in the market. Our record of government involvement in industry is just too appalling to contemplate such a move even if you had no ideological opposition.

But there is now a need for more state engagement, and measures to encourage either consolidation in what exists now, or to persuade bigger players with the firepower to invest in the technology to make the most of these reserves to come in.

If nothing else, the cold snap ought to have concentrated minds. It is farcical that as we scrabble around desperately trying to buy energy from others we have an abundance on our doorstep that is going to waste.