SHELL stoked up the heated debate about the high cost of fuel on the forecourt today after reporting it made profits of nearly £1.6m an hour over the last three months.
A leading member of the road lobby said motorists would be “sick to the stomach” and declared that Shell – and a tax-taking Treasury – was “laughing all the way to the bank”.
The oil group never gives details of its British forecourt sales but it confirmed today that global profits from all sides of the business rocketed to $5.7bn (£3.5bn) in the last three months of 2010 compared with $1.2bn a year ago.
Full year profits reached $18.6bn – almost double the figure for 2009 – and chief executive, Peter Voser, boasted “there is more to come from Shell.”
Yet Voser denied the company was profiteering on the back of the British motorists, arguing that 70% of the cost at the pump went to the Treasury.
“We are suffering like the motorist because we have to pay more (for crude input costs) … I suggest the motorist talks to the government.”
Shell makes the vast bulk of its profits on the “upstream” side of the business – producing oil and gas – rather than the “downstream” refining and petrol sales. The company is benefiting from rising oil prices which have moved up again since Shell’s financial year ended. Brent crude is now trading at over $103 a barrel due to the crisis in Egypt and increased demand.
These rises combined with tax increases imposed by the coalition government have sent the price of pump diesel to record levels and triggered a storm of complaints from the motoring lobby.
Peter Carroll, a leading figure in the fuel campaign, said road users would be “sick to the stomach” to hear how much money Shell was making.
“This just shows that while motorists and the national economy are the losers, oil companies, governments and speculators are the winners: they are laughing all the way to the bank,” Carroll said.
The next rise in fuel duty is planned to come into effect on 1 April but the Prime Minister, David Cameron, is under increasing pressure to shelve it. The government has promised to reconsider and has indicated it is likely to concede to an organized lobby from a grass roots “fair fuel” campaign backed by the AA and the Road Haulage Association.
The Shell figures were boosted by a higher-than-expected 5% increase in oil and natural gas production over the last year. This included a strong contribution from Nigeria, where attacks on the oil company’s facilities have been reduced.
The company is planning to inject up to $27bn into new projects over the next 12 months, which Voser said would bring more rewards for shareholders.
“We are making good progress against our targets and there is more to come from Shell,” he said. The strong results are in line with big profit increases by the US firms, ExxonMobil and Chevron.
BP reported a massive downturn in annual profits on Tuesday but the figures were distorted by the payouts resulting from the Gulf of Mexico.
Voser declined to comment on speculation that Shell had considered a takeover of BP and was keen to distance itself from the safety problems experienced by its chief European rival.
The Shell boss said he agreed with almost everything the US presidential commission said about BP’s Macon do well, except that safety was an industry-wide problem.
He said Shell operated at the highest level and did not like others “outsource” high risk parts of well operations to outside contractors.
Voser also said that Shell was keen to drill off Greenland but had been forced to postpone plans for a well off Alaska during 2011.
Shares in Royal Dutch Shell fell by 3% this morning, though, as City analysts had expected profits to be even higher in the last quarter.