Scott Reid's Business Blog

Published on Thursday 30 October 2008 12:52

ANOTHER day, another bumper profit haul from a global oil producer. On Tuesday BP unveiled record third-quarter earnings of £6.4 billion after the price of a barrel of crude rocketed during the summer.

Today, it was Shell's turn to talk telephone numbers. Its profits bonanza for the third quarter amounted to an even more eye-watering 6.6bn – 71 per cent up on a year ago.

To spare you the time of reaching for the calculator, that's a figure equivalent to nearly 72 million a day – more even than a certain BBC "entertainer" hogging today's headlines.

Shell's coffers were swollen despite a fall in production due to hurricane damage in the Gulf of Mexico and maintenance work closer to home.

News of the massive profit hikes will anger motorists and spark fresh calls for the introduction of a windfall tax. How predictable.

Yes, oil companies will make hay while the sun shines and nobody was expecting anything other than sky-high numbers after crude hit a record $147 a barrel in July.

Since then, oil has since fallen back – more dramatically than many had forecast as the global economic gloom intensifies. Doom merchants flagging a $250 barrel by the year-end will be eating their words.

One suspects that when those nasty oil giants release figures for the closing months of the year, the voices baying for blood will have become more muted.

But let's not lose sight of what those "grotesquely obscene" profits actually represent.

Things like job security for tens of thousands of workers, cash to invest in new exploration projects and environmental schemes, bumper dividends for investors (many of them battered pension funds) and, of course, hefty contributions to Treasury coffers.

Little point then in holding yer breath for that windfall tax.

That said, there has to be some give and take. Oil companies, and energy providers, have been quick to raise prices when wholesale costs head north, only to drag their feet when prices cool.

Speaking on breakfast TV this morning, the Chancellor appealed to oil companies to pass on the recent cuts to the motorist "as soon as possible".

Over to BP and Co then....

You can read more of Scott's blogs at the Scotsman Business Club. Click here to find out more...