Fury as oil giants rake in £3.3m an hour

Published on Tuesday 29 April 2008 22:52

OIL giants BP and Shell yesterday revealed they had made more than £7 billion in three months – to the fury of motorists facing inflated prices at the pumps.

The record profits come as oil prices are at an unprecedented high and the country is struggling with a fuel shortage prompted by the Grangemouth oil refinery strike.

According to the companies, their collective 3.3 million-an-hour earnings are not due to price rises on the forecourts, but better returns in their exploration and production divisions.

However, Edmund King, the president of the AA, said: "The motorist feels somewhat battered from all sides, seeing the oil companies going off with cash in their pockets and the Treasury filling its coffers.

"It's the ordinary motorist that's bearing the brunt of this, while the oil companies and the government are laughing all the way to the bank."

He called on the oil companies to reinvest more of the windfall in drilling and refining, in order to increase the supply of oil and create downward pressure on petrol prices.

The RAC Foundation said anger over rising petrol costs needed to be directed towards the government, adding that a flexible fuel duty would compensate for varying crude oil prices.

Graham Tran, regional officer of the Unite union, said: "These profits are a slap in the face for 180 staff at Shell who were told less than seven days ago that they face redundancy.

"Both Shell and BP have announced pension holidays for 2008 at a time when our members in Grangemouth are fighting to protect their pension fund."

Shell's profits were 12 per cent up on last year at 3.92 billion, while BP's results improved 48 per cent to 3.32 billion.

The figures caused share prices of both companies to jump by 5 per cent in London.

Analysts said that BP's profits were higher than expected, but it was too early to call them a turnaround after performance difficulties in recent years.

The company said it was paid an average of $90.92 a barrel for its oil in the first quarter, compared with $53.43 a year earlier.

Tony Hayward, BP's new chief executive, recently outlined plans to add up to 2.01 billion to profits through a far-reaching overhaul of the business.

He said BP had a "clear, step-by-step plan" to close the gap on Shell and wanted to boost profits in the next four years by restoring and upgrading its problem-hit US refineries. Its Texas City refinery was rocked by an explosion which killed 15 workers in 2005.

Tony Shepard, a stockbroker at Charles Stanley, said BP was "still not firing on all cylinders", but its operational turnaround looked to be on track. He added: "It appears BP is beginning to improve its operational performance and this looks set to drive a stronger financial performance in the second half."

Jeroen van der Veer, Shell's chief executive, said he would continue to expand the company.

Gordon Brown, the Prime Minister, said yesterday:

"I hope that these profits are going to be invested in getting more oil out of the North Sea."

He added that the government was working to help keep energy bills down for pensioners and low-income households. It has frozen fuel duty and was also pressing for Opec, the cartel of oil-producing nations, to get the price of oil down.

Meanwhile, dozens of hauliers took their protest against record diesel prices to central London yesterday. Drivers from as far afield as Wales joined in a cavalcade of lorries. .

The BP and Shell results come ahead of those from other industry giants including Exxon, Mobil , Chevron, BG Group and Total.

>BULLETS<British Airways is to increase its fuel surcharge, with passengers paying up to 30 more for a return flight. the airline said the decision "reflects continuing high oil prices" and would affect all tickets issued from Friday.