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BP feels backlash as profits hit £6.4bn in three months
Paul Waugh, Deputy Political Editor28.10.08
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ENERGY firms faced huge pressure to slash petrol and fuel bills today after oil giant BP posted record profits of £6.4 billion in three months.
The firm's mammoth increase in profits for July to September was 148 per cent higher than the same period last year.
It immediately triggered calls from Gordon Brown for all energy firms to pass on recent oil price falls to householders and motorists.
BP's bumper returns meant that it raked in £70 million a day - or £2.9 million an hour - as prices soared at the pumps this summer to almost $150 a barrel. However, oil prices have since plummeted to almost $60 amid the growing global recession, and ministers and consumer groups want bills to start reflecting the rapid drop in crude costs.
As Labour MPs and unions resurrected calls for a windfall tax, the Prime Minister demanded that BP and other petrol firms immediately cut their prices. "We're trying to help hardpressed families through difficult times, while calling on the energy companies to pass on the falling gas and oil prices for consumers," Mr Brown said.
He added that, "just as when the price goes up, people see it immediately reflected in the petrol pump price", he wanted to see the drop reflected now.
Oil firms faced cross-party pressure as shadow chancellor George Osborne also said that it would be a "scandal" if petrol prices did not start to fall. "BP has absolutely no excuse for not passing on any fuel price falls to customers. It would be a scandal if they do not," he said.
Average petrol prices this weekend fell below the £1 mark for the first time in a year but experts believe there should be more aggressive and immediate cuts.
Electricity and gas firms have failed to slash household bills, claiming that there is a lag in the system which means price falls will only filter through next year. With Britons facing the first cold snap of the autumn millions of homes are suffering from record increases in heating bills.
Downing Street acknowledged BP generated much of its profits overseas and that it needed to invest in North Sea oil exploration and production.
A No 10 spokesman said the public would expect to see the oil companies passing on the recent falls in world prices to customers.
"I think oil companies should recognise these are worrying and difficult times for many people and we want the benefits of the price changes to feed through to people who have to pay the bills," the spokesman said. "Their customers will expect answers on when prices are likely to come down."
John McDonnell, Labour MP for the London constituency of Hayes and Harlington, said he would be raising the issue in Parliament. "This is a grotesquely obscene level of profiteering by BP and I will be calling in Parliament for price controls and profit windfall taxes," he said.
Paul Kenny, general secretary of the GMB union, said: "Now we see the result of this speculation with BP enjoying huge windfall profits.The public authorities have got to get a grip and stop this speculation."
Tony Woodley, joint leader of the Unite union, said: "Struggling, worried families will have every right to feel angry that as the temperature plummets, BP's profits rocket.
"A windfall tax on the oil giants would help six million people heat their homes this winter and would send the clear message that profiteering from the basics of life is not just immoral but will not be tolerated by our government."
BP chief executive Tony Hayward said: "Although it has since fallen away sharply, the high oil price of the third quarter obviously helped our absolute result." However, in an attempt to defend the company, he added that despite the boost from record oil prices, BP had also benefited from an improved operating performance.
Reader views (16)
Seems lots of people forget how much of the bowser cost actually goes to the Oil company and how much goes to Government.
Yes oil companies make big profits but they also spend big in regards to infrastructure, R&D etc, etc.
However if the price of oil goes down so should the price of petrol.
- Chaz, Perth, Australia
Everyone here also talks about a boycott of price gouging oil company forecourts, but nothing ever happens. It won't unless some kind of picketing is undertaken, lawfully of course, with posters and banners urging motorists to maintain the boycott. A month would not be necessary as within a week the entire refining and supply system of the oill company would collapse. The price gougers rely on public apathy to continue in order that they may rip you off. Governments are useless and basically powerless to do anything about the problem.
- Len, Perth, Australia
It would be interesting to see what would happen to their forecourt prices if consumers boycotted BP petrol stations for a month.
- Inoff The Red, London UK
Why don't you ask how much the Government is making in tax?
More than BP's profit by a large margin.
As the price of a barrel goes up so does the amount in tax.
At least BP reinvest for the future.
The government just wantonly spends to keep in power.
Ask Brown to lower the tax if he is so concerned with the price at the pump. Ha!
- Minnie, London, UK
Why are people decrying a British company making a profit, if they got £6.4 billion then what did the government get since they take 80p in every £1 of petrol sold. Ditherer & Darling must be sitting on a huge nest egg, so where is it?
- Richard K, Nottingham
In times like these we look for strong and purposeful leadership. I call upon Brown and his mates to introduce price controls instead of "urging" these companies to behave responsibly. The capitalist system demands that companies maximise their profits - they are essentially commercially psychopathic. Rather than blame them or try to cajole them the Government must control them.
- Chris Young, nottingham
Nobby - just because a company researches and explores in difficult areas it does not give them the right to exploit consumers. Their profits should be passed on to the consumer. I take it these profits come after the cost of exploration etc, and how on earth has the government made BP dodge any bullets? They go to these areas of their own accord with the express purpose of making a profit by pilliging the earth. Perhaps if you are so concerned about bullets you might think their profits could be passed on to our armed forces, who oftern fight to keep peace in these very areas that the oil companies exploit.
- Ken Joralemon, London, UK
Judging by the comments below, its shocking how little grip on reality most people have.
Are we in 1978 or something?
- George, London
The fact that the oil companies are ea=ning huge proficts, means that they will be paying huge amounts of tax already.
The govrnment needs to be careful as companies are already relocating to countries where tax regimes are lower as tmR Brown continues to make th UK an uncompetitive place to do business.
The governement has got us in this mess by not inveting the profits they have had from th north sea and other tax returns during the good times.
- Steve Clarke, Abingdon, UK
Can't Gordon Brown simply use this money to bail out the banks?
- Luciano Payne, Streatham Common
BP are always the most expensive fuel stations. As fuel is always a 'distress' purchase, they are ratcheting profits at our inconvenience.
Avoid using BP by purchasing elsewhere.
- Md, Wokingham
Governments don't work, clearly this evidental in fatcat profits from the struggling many. Operating costs are still high and businesses will fail no matter in this uncompetitive market for the rich. Life energy i.e. fuel is another example of how governments don't work.
- Eugene, Londonderry
Let's hope Gordon Brown's windfall tax on these oil giants brings in the billions we need for combatting the credit crunch, then taxes may not have to rise
- Keith Price, Luton, England
BP and others have to explore in dangerous countries - often dodging bullets that are fired at them because of Labour's legacy; they invest millions in drilling and transporting a product that we all depend on. These companies then have the audacity to make a profit on the operation. Shock, horror...
Look at how much HM Treasury has taken from motorists in the last three months as a result of fuel duty being linked to the extortionate cost of petrol and diesel: probably about £12-13bn. And what have the government done to deserve their share? Have they built any new roads? Invested in the planned 1,300 new railway carriages? Laid 1 inch of the Crossrail track? No, in all cases.
So, although BP's profits might seem extreme, have they come cap in hand to UK Plc to be bailed out? No, unlike their financial counterparts, who have all made obscene profits in the past few years and speed them up the wall of the local wine bar.
- Nobby Clark, Perth, Scotland
So if roughly 2/3 of the price of petrol is duty, how much money has just gone into Government coffres?
- Marianne, S W France
Proof that the pump price bears no relation to the cost of fuel. The increase we have been paying is translated directly into increased profit for the Burning Planet Corp.
- Neil, london uk, Airstrip ONE .
