Tuesday, 3 February 2009

BP & Shell make £40bn profit out of our misery.

During 2008 we saw massive increases in the price of petrol at the pumps. All through this period we had a continuous stream of oil company spokesmen telling us there was nothing they could do to lower their prices. Well, it looks like that was a load of old pony. Mind you, did anyone believe them? I certainly didn't - I've heard all their excuses before - only to be followed by news of record profits.

Many companies went to the wall last year, unable to keep up with rising fuel prices. Many families struggled to keep cars on the road, how many of those families built up debt just to get to work?

From Ananova:

BP announced its annual profits jumped 39% to 25.6 billion US dollars (£18.1 billion) as last year's soaring oil prices fuelled results.

The performance came despite a profits blow in the final three months of the year, as prices retreated sharply from the record of almost 150 US dollars a barrel reached in July.

But BP's profits - alongside rival Royal Dutch Shell's European record of £22 billion in profit last week - leaves the duo with a combined £40 billion haul from 2008.


Man in a Shed said...

Steve, I'm afraid your making a common mistake, one that the BBC never tires of trying to promote; for example by lumping companies together as "Energy companies", or their other favourite trick of interviewing people at petrol pumps asking them about oil company profits.

Most of the money made has been from Oil production ( which requires very expensive investment in exploration up to decades before hand - when the oil price was very different from last year) and the diplomatic skills that are so obviously absent from our professional politicians.

Shell and BP will have made most of their money overseas, and hence we're lucky that our pension schemes are getting dividends from these profits and that much of the head quarter operations of these two companies are based here ( = tax + spending ).

I believe you'll see BP announce redundancies in its UK staff very shortly and probably Shell also as they get ready for the downturn.

The refining and petrol retail business is far more marginal than is popularly believed.

For example did you know that BP own no refineries in the UK any more ? I think Shell just has one left. The petrol they are selling was refined and blended by other companies. They are in the same position as Sainsbury's or Tesco's now when it comes to petrol retail.

The big threat is that BP and Shell might leave the UK all together ( BP to the US and Shell to pull back fully to the Netherlands - where it is legally based ). They have been selling their assets in the North Sea and most of their refinery capability over the last 10 years, not that the media has reported this to people.

Paul Sloane said...

I agree with the Man in the Shed. BP and Shell are national assets who pay taxes and whose dividends fund our pensions. If you want to complain about the price of petrol blame the gubmint since most of the cost is tax.

Daily Referendum said...


No I didn't.

I was going to write in that usual excuse because it's the one that always gets thrown about at times of reported record profit. I know all about the actual selling of petrol making them little profit - I've read about it hundreds of times. But considering the hardship faced by millions last year they could have used some of their record profits to ease the price at the pump.

Anonymous said...

Man in a shed is spot on. To take the point further if you take away Gordon Clowns taxes, petrol at the pumps costs less than a litre of milk or bottled water.


William Gruff said...

I'm Sorry Steve but I agree with MiaS and Paul Sloane. It isn't the oil companies' profits that make petrol so expensive it's the obscene amount of tax we have to pay for it, as you know.

Daily Referendum said...

Mr Gruff,

I've heard all the arguments before. What MIAS said is all true, however when people are struggling I think the oil companies could have done more taking into account massive profits from other parts of their business. Of course it would have been better for Brown to cut the tax on fuel. That's why I supported Osborne's Idea of cutting the tax when the price is high and raising it when it drops. We'd be paying a bit more now, but many companies that went to the wall last year may well have survived.

Anonymous said...

Steve, the profits are made globally. They really cannot discount the price in the UK alone.


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Man in a Shed said...


I understand the point about struggling, but what I want to say is that these companies already contribute greatly to this country, and vastly beyond proportion to the business they do here.

The threat is that they may move overseas, and there are signs they are doing so. Other countries would kill to get their hands on companies like them. Oil and Gas is one of the few, perhaps apart from mining ( which the Chinese would very much like to buy - I wonder what the Chinese Leader was discussing on his visit to see Gordon ? ), areas where the UK is the world leader.

We have lost ICI, ownership of our car and steel industries in recent years. Other countries now get the profits from these assets. We have almost lost defence, and BAe may yet become American. There are few options other than retail and finance left - and I think we've all just spotted the problem with relying on this approach.

It is to a large degree the fault of our media that they don't point this out more clearly. ( I bemoaned the passing of ICI, as part of a similar complaint about the cost of living your making last year here. )

Where something could be done is in the burden of the state that ordinary people have to carry. Lord Digby Jones, horrified at his time as a govt minister, said more could be done with half the number of civil servants.

These central government civil servants are on high salaries, have job security ( almost unlinked to their performance ) and gold plated pensions they can start enjoying at 60.

The problem is tax caused by govt waste crushing people under it weight.

Instead of lightening this load, govt is taking out a new mortgage (in effect ) for every tax payer in the country that will put them further under the cosh for the next 20 years. This is worth getting upset about.