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The Guardian: Shell set to stir petrol storm with record profits of £13.6bn

Oil group to post highest earnings by a British firm

RAC urges the chancellor to cancel rise in fuel duty

David Teather , Monday January 28 2008

Shell will be at the centre of a political storm this week when it posts profits of almost $27bn (£13.6bn), the highest earnings ever made by a British company.

The record-breaking profits, on the back of soaring oil prices, seem likely to stir fresh allegations of profiteering. The price of petrol has been increasing sharply, rising from 71p a litre five years ago to about 104p a litre today, according to the AA.

Texas-based Exxon Mobil, the world’s largest privately-owned oil company, is expected to improve on its own previous record on Friday by reporting earnings of $39.6bn, the biggest annual profits that the US has ever seen.

Kate Gibbs at the Road Haulage Association described Shell’s profits as “absolutely scandalous” but reserved her strongest criticism for the chancellor of the exchequer, Alistair Darling, who is planning to add another 2p a litre in fuel duty in April. More than 65% of the cost of unleaded petrol goes to the exchequer in fuel tax and VAT.

“If it is not Shell reporting record figures, it is BP,” Gibbs said. “We don’t like it but what’s the point in criticising? But we have a chancellor who is hellbent on adding to the fuel duty and we are doing all we can to lobby parliament.”

The RHA is meeting members of the transport policy committee in Westminster on Wednesday.

The RAC Foundation, a group that champions the interests of motorists, has begun conducting research about the impact of rising petrol prices on car owners and on business and hopes to persuade the chancellor to scrap the latest fuel duty increase.

“The price of petrol at the pump isn’t very much to do with the profits of the oil companies – it is the chancellor who is responsible and he is the one person who can do something,” said acting director Sheila Rainger.

“We would very much like to see the April increase put on ice and to see the October increase rolled back again. When these decisions were made, crude was half the price it is today. We are now very worried about the effect of petrol prices on motorists and on the economy, because if people are being forced to pay more, they are cutting back spending on other things.”

City analysts are forecasting that Shell, due to announce its results on Thursday, will have made around $26.6bn in 2007. The Anglo-Dutch company reported profits of $25.4bn during 2006. By comparison, Tesco, Britain’s biggest retailer, made £2.7bn last year.

The oil price hovered at $90 a barrel in the last three months of 2007. After spiking this month and briefly breaking through the $100 level, it is trading at about $90.66.

A Shell spokesman declined to comment ahead of the results. But the company has previously defended its profits, arguing that the lion’s share is re-invested – capital expenditure in 2007 was forecast to be in the range of $22bn-$23bn.

Production is getting more expensive as easily accessible resources become more difficult to find. The industry reckons that the cost of production has gone up from $5 a barrel in 2000 to $14 in 2006 and many analysts believe that oil company profits may have peaked.

Jeroen van der Veer, Shell’s chief executive, warned last week that by 2015 supplies of easy-to-access oil and gas would no longer keep up with demand. Governments are also demanding higher cuts from new oil fields. and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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