That’s the most important outcome of the surprise attack by the Australian Government on the petroleum industry which saw the abrupt end of a 24-year-old exemption from excise on the production of light crude oil (condensate) from natural gasfields.

But, even as Woodside and industry lobby groups lodge their protests after the event, there are questions which must be asked, such as:

. Who knew what before Tuesday’s Budget announcement?

. Who’s next?

Searching for scapegoats is of historic interest, but will not achieve much. It’s the who’s next question which ought to have every oil and mining company in Australia on watch because if oil was good for a tax whack why not iron ore, copper, or nickel?

What really happened on Tuesday was much more important than the removal of an incentive (no tax) to encourage the production of natural gas by not applying the same excise on condensate that is applied on oil.

The Government, with some conviction, argued this was an incentive which had run its course, and it was time that condensate attracted the same tax treatment as oil – especially as the oil price was above $US120 a barrel, and condensate attracted a premium price lifting it to around $US130/bbl.

Woodside boss Don Voelte was an angry man when that rationale was trotted out. He correctly pointed out that this was not simply the closing of a loophole “or a free ride coming to an end”

“This is a negotiated fiscal arrangement which formed the basis of Australia’s largest resource development,” Voelte said.

Yes, yes, yes – a thousand times yes because Voelte is 100% correct. Not that it’s going to do him any good, and he knows it.

As a good American boy Voelte was taught in Grade 1 that “you can’t fight city hall”, and in Australia that means it’s pointless taking the Australian Government to court because (a) it’ll cost a fortune, (b) it’ll chew up management time, and (c) even if you win they can change the law retrospectively, or do something even nastier to your tax, approvals, or operating conditions.

That means everyone at Woodside should take an aspirin (or a stiff Scotch) and have a nice lie down.

It’s what happens next which is really interesting because the attack on condensate has the potential to be the thin edge of a government wedge into the wider resource sector.

Iron ore is the classic next potential cab off the rank. Profits in iron ore are prodigious, and, while it is not the Australian Government which directly taxes iron ore (apart from income tax), the lesson from the condensate experience will be noted by state governments – which are all from the same political party as the Australian Government.

Last year, an average 5% royalty from iron ore production pulled in $830 million for the Government of WA, a number which barely touches the sides of an industry that produced $16.12 billion worth of ore in 2007 – a number which will effectively double this year under the effect of higher tonnage and an expected 85% price hike.

How easy would it be for the WA Government, under the smokescreen of the global resources boom, to add a percent (or two) to its iron ore royalty regime?

It’s the potential for a resource sector-wide hike in government taxes, royalties, excise and the multitude of other costs imposed on miners and oil producers that ought to have everyone on full alert.

And speaking of full alert, why didn’t someone at Woodside or the Australian Petroleum Production and Exploration Association get wind of the condensate change?

Within Woodside there must be an awful feeling today that one of the former own, Gary Gray, has let his old firm down. Before being elected to Parliament at the last election Gray was a senior executive at Woodside. Today, he sits as a Parliamentary Secretary, one step short of a Cabinet post.

Within APPEA there should also be some soul searching because the industry’s peak lobby group ought to have its finger on the political pulse, but obviously did not on this occasion.

But, hunting for scapegoats and talk of legal challenges is hollow chatter.

The truth is that government can apply whatever taxes it likes on industry and, with wall-to-wall Labor governments in Australia industry, has just been reminded that it is the enemy, and the resources sector has been told it is the milch cow which will be used to fund future Labor policies.