Shell was today accused of making "obscene" profits at a time when pensioners, motorists and industry are struggling with higher energy prices when it unveiled annual earnings of $27.6bn (£13.9bn).
The oil major has made British corporate history with the record figures, which are equivalent to more than £1.5m an hour and come at the end of a three month period when crude prices have averaged over $90 a barrel.
Jeroen van der Veer, chief executive of Royal Dutch Shell, described the performance as "satisfactory" and admitted that overall production for the year had actually dropped 2%.
He said the company had benefited from launching new oil and gas projects but had suffered in the last quarter from weak refining margins.
"We are proceeding with the rejuvenation of our portfolio with investment in new legacy assets and through disposals. The execution of our strategy is on track."
But Tony Woodley, joint general secretary of Unite the union, Britain's largest trade union said a windfall tax should be imposed on "greedy" companies such as Shell whose profits are more than four times higher than retailer, Tesco.
"Shell shareholders are doing very nicely whilst the rest of us, the stakeholders, are paying the price and struggling," said Mr. Woodley. "Record profits of over thirteen and a half billion pounds at Shell and cumulative oil industry profits in excess of fifty billion in the last three years are, quite frankly, obscene. It is time the government acted."
A windfall tax would be the "right and proper" thing to do over and above the normal taxes the oil companies would pay.
"The oil companies can maintain their investment programmes, maintain their explorations, pay their normal taxes, maintain good returns to shareholders but still put their hands in their treasure chests and pay a windfall tax," he added.
Motorist organisations have already complained about pump prices soaring to over £1 a litre and although the government tax take makes up much of that price, the Road Haulage Association described Shell's profits as "absolutely scandalous".
Nigerian problems
Van der Veer denied that the company was profiteering on the back of motorists, arguing that Shell profits were mainly coming from the upstream side of the business "and not at the gasoline pump in the UK".
A large part of the petrol price could be attributed to taxation over which the company had no control and any cross-subsidy from one part of the business to another would be effectively "killing yourself".
While the company had made annual profits of $27bn, it had invested almost the same amount in developing new projects along with an additional $7bn on securing a larger equity holding in Shell Canada.
A windfall tax against the oil industry would be counter-productive, he argued. "Any additional tax - if significant - then we can invest less and over time it will impact on our production," he said.
Shell's total oil and gas output in 2007 fell for the fifth year in a row and the company laid the blame for the decline partly on Nigeria.
Van der Veer met the president of the country last week and admitted the company was suffering from escalating violence in the Delta region and problems obtaining funding from its state-owned oil partner.
Shell took a $716m charge in the last quarter of the year to pay for a downsizing and restructuring of the onshore side of the business. "The Nigerian government is slow funding their share of the costs," said van der Veer who has previously avoided being critical of the authorities there.
There is widespread speculation that the government wants a bigger slice of the action in a similar way to the resource nationalism being executed in Russia, Venezuela and elsewhere. Van der Veer admitted globally the competition from state-owned national oil companies was a dangerous trend.
Will it grow? "Yes, it will, especially if gas prices stay high. Does it impact the (Shell) strategy? Yes, it does," he added, saying oil companies such as Shell had to provide skills and technology others did not have.
The Shell boss said the company was facing a 10% annual increase in inflationary costs but shrugged off any reduction in energy demand as a result of any US of global economic slowdown. "We expect year 2008 to have higher energy demand in the world than in 2007," he added.
The full year profits at Shell were 9% up on last time whilst the last quarter figures were up 11%, but no details were provided of the profits made from petrol sales.
The Anglo-Dutch company has declared an 11% rise in the last quarter dividend and expects a similar increase in the first quarter dividend. It spent $4.4bn last year buying back its own shares and has spent $26bn on new oil and gas schemes.
- guardian.co.uk,
- Thursday January 31 2008
Source: http://www.guardian.co.uk/business/2008/jan/31/royaldutchshell.oil1/print
I feel nauseous. Oil companies disgust me , and Shell is arguably the worst. Shell has destroyed the Niger River Delta and brutally repressed the people living there (not without the consent of the Nigerian government, though). They run a private security group that kills and tortures dissidents and "terrorists" seeking to expel the company from the region. And all the while they reap windfall profits while poor schmucks pay out the ass at the pump. Ug! Awfulness galore.
And for those--Beck I mean you--who might find the Guardian too biased in its reporting there is a similar story at the BBC: http://news.bbc.co.uk/2/hi/business/7219148.stm
12 comments:
I haven't bought Shell gas in well over a year and a half now. I have a Nigerian friend who explained to me the horrific things they were doing to her country and I couldn't hardly stand it. I decided the least I could do is not buy Shell gasoline.
Oil companies are the very essence of evil and one of the greatest examples that an unregulated market breeds the very worst kind of corruption (hence why I am not a Libertarian - too bad too, those guys have the social aspects right in line with my politics). Abuses of power are everywhere, they are a cabal that orchestrates the systematic draining of the pockets of the world without giving hardly anything back in return, they are the worst in man, period.
Exxon just reported record profits too. Just add some more fuel to the fire.
Well, while I do believe in a mostly free market, I think that like in physics, the rules of economies change when you start talking about very large or very small scales.
When a corporation makes more annual profit than the GDP of several of today's developed nations, we need to think long and hard about how much power and influence we're going to allow these multinational corporations to have.
I mean, if we look at a corporation like Microsoft, who's annual revenues are typically in the $16-20 billion range, of course we find aggressive business tactics, even to the point of being bullies. But: they aren't making profits at the expense of their consumers. On the contrary, Microsoft products are often the products of choice in their respective markets.
But oil companies on the other hand are selling the same product they did 60 years ago. The only thing that has changed in the increased demand, and a society who's infrastructure has evolved to the point where it simply must have it to function.
They have us all by the balls, and they know it. And while the consumer and our economies suffer, they wallow in record profits. Hell, even the poor schmoes that sell their gasoline to us don't make any substantial profit on it. That's why you never see a gas station that doesn't have a convenience store attached. They make more profit from selling a single gallon of milk than they do selling 20 gallons of gas.
So what to do? The whole windfall tax idea is a non starter. Simple economics implies that Exxon n' Friends will simply jack up the price of gas as a result, which would defeat the purpose.
I'm also hesitant to implement anything like a government sponsored fuel stipend or a tax break, because frankly, that's just too hard for your average family to keep track of. Could you imagine saving your receipt every time you pump gas, and submitting them all to the IRS at the enhd of the year? I mean, I would do it... but it's a huge hassle. And what about folks who already don't pay much in the way of taxes? Gas prices hit them harder than anyone else.
The only way out from under this shitty situation is an alternative fuel plan. I don't think mflex fuel cars and ethenol are the answer, because we don't want energy competing with food production. That's just stupid. We'll be shifting the cost of fuel to the cost of corn and sugar.
Now, I've stated this in the past, but I really think hydrogen fuel cells are the answer. The problem is, it won't ever take off until an infrastructure is built to support them. (convenient places for consumers to refuel)
I would whole heartedly support a government sponsored program than encouraged the development of hydrogen fuel infrastructure in selected locations across the country to encourage growth and adaptation of the technology. It can't happen overnight, but if we can just start the ball rolling, that's half the battle. Then the momentum of the market will take it from there.
Any way forward will clearly necessitate both moving away from traditional petroleum-based transportation. Sadly, that is a ways off. An interim step would be dramatically improving public transit. The down side here is there will be huge lag between when public trans systems expand and how many people use it. So politicians will more than likely see the lower ridership as a reason not to fund the projects. It takes people time to change habits like driving everywhere whenever they want, but overtime my bet is that more and more people would use public transit. In the Triangle for instance the state canned a multimillion dollar light rail project linking Raleigh, Durham, and RTP because they estimated ridership would be too low to balance the cost. Probably true. But the more people ride, the more people ride--if you follow. Trends take time. I imagine most anyone who as drive that route and sat in traffic for an hour would only have to take the train once or twice before they thought "Damn, I can eat breakfast and read the paper ont he way to work; screw driving". The thing is getting them to use it the first time.
The other side of this is to increasingly make using a car more costly, both in terms of gas prices--which is already happening--but also by increasing taxes on cars (or giving tax breaks to people who don't use/own) cars or increasing costs of parking, increasing the number of toll roads, etc. I know this would be terribly unpopular and many people would even see it as a tax on the poor. I would counter that the necessity to own a car is a already a tax on the poor, so providing mass public transportation options would alleviate that burden.
If the US devoted even a tiny fraction of what it spends on highway construction to light rail and other mass transit (even to suburban areas) we would sidestep much of the oil price issue altogether.
Yeah, I am not with your Driving Tax there Reed. I know it is good intentioned but not viable for a number of reasons in the US. 1.) Our culture is not geared toward non-independence of movement. 2.) It would completely disproportionately affect the working class. 3.) It would take years to implement the public transit systems. 4.) Some town and city councils would not be able to afford light rails and some wouldn't be able to afford public transportation. 5.) To be completely honest, I prefer the security of knowing my car is outside and I can go where I please (this ties in to the first point).
Consumers are already stretched thin. A new tax for driving a car is completely counter productive and seems more punishing the shackled user rather than going after the abusive dealer. Alternative energy sources are where it is at entirely. I don't care if its hydrogen, solar, electric, poo-powered, whatever (although I am not really big on the ethanol idea). We must get off oil, period. And during the transitional phase, we need more fuel efficient cars. If a company came out with a cheap 50 mpg car (whatever happened to the Geo Metro?) and advertised it, I think the public would jump on it. I mean, why not legislate some % of cars have to 50 mpg per manufacturer? (The recent legislation on this issue was a joke btw.) Or screw it, why not manufacture the cars by the US government? Fuel efficient, affordable, environmentally friendly cars made by the US government as part of a new great works project - creates jobs too!
Just impacting the bottom of the economic strata is exactly what the oil companies are thinking/planning/wanting us to do! That is acting just like the oil companies. That is not the answer. There MUST be another answer.
I understand that increasing taxes on cars would hurt the lower classes disproportionately, which is I mentioned in my post. So maybe just giving people a tax break for not owning a car is a better way to go. The point you make about independence of movement is one of the problems, though. Americans have become totally lazy in this respect. I want to go buy a 12 pack of Coke and a snickers now and I don't want to wait 20 minutes for a train. I want to know that I can hop in the car and drive wherever, whenever, and for whatever reason. Hey, like those things too. But I would also like to know that if my fucking car broke down I could go hop a bus and get where need to go in a reasonable amount of time. But for most of the country that option doesn't even exist. That, I think, is a serious tax on the working class. How many wage earners end up fired or docked pay or otherwise penalized because they have to rely on beat up cars, the only ones many can afford? Wouldn't it be better to give them access to a quality, rapid public transit system. Not to mention, they could save that money and pay for something else--like, I don't know, health care or rent.
I understand too that it would take time for Americans to get over their reliance on cars, but it kind of seems like that something that needs to happen. Even if gas mileage dramatically improves or we switch to non-fossil fuels the cost of a geometric increase in autos on the road is huge when you consider ever increasing road construction and parking facilities (both in terms of increased tax revenue and loss of land). Not to mention that as more and people use cars you would need to keep driving up fuel economy by a couple of mpgs per year.
I am all for upping mileage and moving away from reliance on fossil fuels. I just think is only about half the problem. Part of the solution, I would argue, is changing people's reliance on the car. It seems like a big deal not to be able to jump in the car and go, but every time I come back from Europe or another place in the US that has good public transportation (Chicago, NY, Boston, etc) I am amazed when I realize how little I missed my car and how I was actually more independent without it. Now, I am not dumb enough to think that this will happen over night nor that it is feasible in every place. Rural areas are harder, but at least it would be possible to significantly expand public transit to these areas and to expand it metropolitan areas. The questions then are how to fund it and how to get people to use it (initially).
I see your point, but I think that pushing public transit over personal mobility is more pushing a lifestyle choice than anything else to honest. Some people do not like public transportation, the lack of privacy, perhaps safety concerns, time infringements, being surrounded by strangers, so on. I mean if you live in a city where it is part of the culture, so be it (New York for instance, or even Chapel Hill - where isn't it free?). But for many modern cities, it is just not as viable, especially where the city has more sprawl - which could be a whole different discussion but is a fact. And in all seriousness as hokey as it might sound, time spent using public transportation is time that could be spent with one's family, because an extra hour a day CAN make a world of difference.
And I have been on many a train and bus in Europe too. Is it great for traveling while on vacation? Yes. Would I want reply on a bus for my personal movement all the time? Hell no. Perhaps I am spoiled by our culture. I like the freedom of movement that personal transportation grants me. I find that a special and wonderful blessing. I don't want to live like people in Europe or even New York for that matter. Using public transportation occasionally is fine for me, but I do not want to depend on it.
And let us not forget that one can be fired just as easily for the bus or train being late as with one's car.
And giving a tax credit for not owning a car is an interesting idea, but it seems to me that tax credits could be distributed MUCH better than something like that. Like a transportation credit to people making under $50,000 for the unexpected rise in fuel costs or something of the ilk.
Alright, we will just have to disagree on that. You are making a trade off between efficiency and low cost versus personal choice. If you value the ability to travel freely more than reserving resources or making transport more equal for everyone then that's fine. What I see you argument is more that convenience and personal preference is what should matter most. I just don't see it the same way. Sure some people may not like public transit because they don't like to feel cramped or be with poor people or have to wait 15 minutes. Ok. Buy a car. Fine. I think transportation should be like education. The state provides X level to all people. You don't like it for whatever reason, buy a car. But you pay more. The problem is that the state provides no public transportation options.
I guess in this case you are saying the market it right. People want privacy and whatever and they will pay. Ok, so gas goes up and people keep driving Escalades. That is the market at work. There a couple solutions: mandate a cap on gas prices, promote alternative fuel fuel vehicles, or alter the transport patterns of the masses. They all require market manipulation or either implicitly or explicitly try to alter the preferences of consumers. Which is better?
For starters, you could do an independent government study and discover price fixing on the part of oil companies and then impose strict fines for a few years and give taxpayers a rebate for the gouging the oil companies have so obviously been engage in, in a very concerted way I might add. Then force a breakup of the oil cabal, much like Ma Bell. Basically saying to them, "If you are going to act as one to manipulate the market. Then we will punish you as if you were one and breakup this monopoly." This of course would work for US-based companies, for foreign companies... hmmm... perhaps work with the governments in their base of operations to do the same? Or place high tariffs on them so that in order to compete with the US-based ones they will have to drop their profit margins? See how they like market manipulation.
I am completely for alternate fuels. This is where our money and time should be spent. Fuck the Oil Barons! Give tax incentives and tax breaks to alternative energy and cease giving it to fucking oil. Our Congress is full of vile monsters or blithering idiots.
On public transportation, I think we will have to agree to disagree.
But for the record, only an ass would buy an SUV. Bad for the environment, for the pocketbook, and makes you look like you are trying to compensate for something. Screw SUVs.
Just another "neat" story about oils companies. This is from NPR, and it is about the only coverage I have found. Sorry it's not a longer print story. Check out the link though. The story shows both how terrible and unconcerned with people the oil companies are as well as illustrating the retarded politics that continually provide protection for big oil. Disgusting.
"Three years ago, an explosion rocked a BP refinery in Texas City, Texas, killing 15 workers. A proposed plea deal would see BP fined $50 million in exchange for avoiding an investigation of its safety history. But the deal has critics. Wade Goodwyn reports."
http://www.npr.org/templates/
story/story.php?storyId=18656603
Poepe: "But for the record, only an ass would buy an SUV. Bad for the environment, for the pocketbook, and makes you look like you are trying to compensate for something. Screw SUVs."
That's a fairly broad net you're throwing there, Pope. Sure, there are plenty of vehicles out there that are bought purely for their cosmetic value and have poor environmental consequences as a result, but singling out SUVs and calling those who drive them asses is a little unfair, especially when there are many models that get the same or better gas mileage than many of the sedans, minivans, sports cars, and pickup trucks on the road currently.
Though I have the sense that if given an opportunity, you would qualify your statement to specifically target the likes of those who buy Hummer H2s and H3s and the like...
In which case, I would carry that sign FOR you. :P
Technically, if you follow the string of comments, I was making that statement in regard to Reed's comment about "Ok, so gas goes up and people keep driving Escalades." So singling out SUVs was a comment more in reply to that, but... SUVs get an average of what? 14 mpg, maybe 15? 29 on a hybrid? That pretty much sucks in my book, especially for the hybrid. Consider that we had fuel efficient cars that got nearly 50 mpg over 10 years ago and those number look even worse.
At this point in time, I stand by the statement I made. 5 years ago even, the situation was different. Gas prices were lower, global environmental awareness was not on the forefront of most American's minds, and the SUV was more a "cosmetic decision". I even owned a Jeep Wrangler a few years back. Now, I perceive them as a gas-gulping symbol of conspicuous consumption and false status in the US mindset and find most people I have encountered who buy them nowadays are kinda jerks. And the people who buy the other cars and trucks you mentioned at this point in time, if they do not do their homework on fuel economy and such, they deserve to pay these outrageous, "obscene" if you will, prices for gas.
And on people who drive Hummers and the like... I would say they already know they're jerks :-D
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