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Oil giants keep on raking in the profits

Our View: Oil giants keep on raking in the profits


Rocketing profits reported this week by oil giants Royal Dutch Shell and BP have been met with anger and incredulity around the globe.

BP’s $17 billion and Shell’s $18 billion quarterly profit can only be viewed as obscene by individuals and companies who were hit with record costs at the pump in mid-year.

While we in New Zealand were paying more than $2.20 per litre, and businesses and families were hurting, the oil firms were raking in the rewards.

In Shell’s case, the proceeds amounted to a profit of $200 million per day.

The multinationals say that oil prices have fallen from their extreme highs, and their run of record profits has now ceased.

However, recent statistics in New Zealand show we are still paying too much for our fuel, and there is significant room for prices to fall to a reasonable level.

Crude oil is down 50 per cent from the highs of July, but our fuel costs have not fallen by anywhere near that amount.

A Government study recently found that New Zealand’s petrol market was “fundamentally competitive” and that prices were not, as people would believe, quick to rise and slow to fall. But is that our experience as consumers?

One of the culprits is our exchange rate and the fact that on the international market we pay for our fuel in US dollars.

With our dollar rallying slightly, and with international forecasts now predicting the price of US-traded oil to fall to $US70 a barrel at the end of the year (down from an earlier forecast of $US115) we should expect improvements to flow through – not to the level of 1998 prices, sadly.

Meanwhile in Rotorua, as reported on page one today, service station drive-offs and fuel thefts from rural properties are as rife as ever.

Police say they are still getting about five reports of drive-offs a week from service station and there are fears thieves could be running a black-market petrol station.

There may be cheaper fuel ahead for honest motorists, but we can be sure the oil giants will continue to make huge profits – and local thieves will make profits on a much smaller scale.


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