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Daily Express (UK): ARE SHELL'S PROFITS OBSCENE?

AS THE OIL GIANT DELIVERS RECORD RESULTS OF 313 bn WE ASK…
ARE SHELL'S PROFITS OBSCENE?


YES says Tony Woodley: TRANSPORT AND GENERAL WORKERS UNION

THOUSANDS of people are anxious about their pensions. Industry is worried about mounting energy costs.
A lot of older people are dreading the next fuel bill. That's why the T&G believes a windfall such as rising oil prices should deserve special tax treatment.
That is why it sticks in the throat when vast companies such as Shell rake in multi-billion-pound profits through no great risk-taking – and hand the bulk of it to lucky shareholders.
There are environmental concerns too. As Friends Of The Earth said yesterday: “Oil companies must be forced to face up to their wider responsibilities -on climate change, on the environment and on human rights.”
Shell's £13billion profit announced yesterday comes hard on the heels of record results at Exxon and anticipated records next week at BP
As a trade unionist from a manufacturing background I recognise the high levels of investment these companies make. I know the risks my members take in working offshore as well as delivering fuel to forecourts. But these profits are down to one thing – sky-rocketing world oil prices (up 44 per cent last year) – not enterprise or initiative by the companies.
We don't propose this new windfall tax just to punish the oil majors. There is a real social problem this unearned cash could help solve. Tens of thousands of loyal employees at companies such as United Engineering Forgings, ASW, Dexion and others have seen their pensions evaporate through bankruptcy or corporate cutbacks.
It is to help them that lobbying and legal actions by unions have forced Government action such as the Financial Assistance Scheme. The Pension Protection Fund has also been set up to help those including MG Rover workers who have seen their pensions put under pressure as companies collapse. But there is more to be done.
This is where the windfall tax comes in because those whose pensions were robbed have only limited access to the Financial Assistance Scheme.
Behind the headlines are people struggling to make ends meet. Those struggles, ironically, involve fears of rising fuel and energy prices. It is the elderly who, even after the Government's winter fuel payments, still live in fear of the bills. Track those bills back and the big oil companies are implicated. They also stand accused of raising prices to industry, which puts jobs and pensions under even greater pressure.
That is why when such companies as Shell and BP enjoy the benefits of rising prices, the Government should say they have a duty to the rest of the community to donate part of their windfall.
Critics say an extra tax is anti-business and anti-profit. Nonsense. Are Shell and BP saying they won't carry on investing and paying shareholders' dividends? Of course not. The truth is they have got lucky and should put a bit more in to help the rest of the country with the real difficulties we face.
• Tony Woodley is general secretary of the TGWU.
NO says Chris Skrebowski: EDITOR OF PETROLEUM REVIEW
WHY does [financial success by an oil company attract such consistently negative reactions? During the Second World War it was said of American GIs that they were “overpaid, over¬sexed and over here”.
The oil companies appear to be heirs to this sort of simplistic analysis. Part of the resentment of the GIs was the subconscious realisation that success in the war depended on them. Similarly, do we resent the oil companies because we depend on them so much?
Western society is wholly dependent on the oil industry's products for transportation, and for food in both its growing (pesticides, fertilisers) and its delivery and packaging.
All our petrochemicals, lubricants and solvents are oil derived.
As President Bush observed, our societies are “addicted to oil”. Even if we use the less pejorative term “dependent”, it is easy to see how we resent our dependence while remaining fearful that the supply might dry up.
It is hardly a revelation that there is increasing concern about the price and availability of future energy supplies. The traditional oil companies that you can buy shares in, such as Shell, now produce only about 16 per cent of the world's oil supplies – although, by buying from other producers, they supply more than 20 per cent of global demand.
Since the oil crisis of the Seventies, oil companies have had little or no ability to set prices. Initially, this passed to Opec but since the mid-Eighties the market has determined the price of oil.
The market simply reconciles the buyers and sellers – and what the steady rise in the oil price is telling us is that there is more demand than there is supply. The world is operating flat out, with a limited volume of technically unattractive crude in Saudi Arabia as the planet's only spare capacity.
Oil company profits are the basic source of investment capital and shareholder reward. So, at a time when we want oil companies to be investing to increase supply, and at a time when we are worrying about the solvency of our pension funds, shouldn't we be rejoicing that they are making large profits? (One pound in eight earned by our pensions funds comes from BP and Shell).
If we examine Shell's latest results, we find that the company is already struggling to maintain its oil and gas output but is committed to investing in alternatives and building at least some of these into major new businesses.
The power of oil companies means that they will always have more critics than friends. However, we would do well to wish them success in balancing out investment to increase oil and gas production, rewards to shareholders – to give many of us pensions – and the amounts to be invested in the new energies which are the future.
Oh, and if they could just make sure they don't trigger climate change as well, please.
• Petroleum Review is published by the Energy Institute.

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