Afternoon:
9°c
WE'VE discovered the hard way that if there's one thing worse than having banks which are making too much money, it's banks losing so much the taxpayer has to rescue them. So before we listen to the ritual attacks on oil companies' profits, we might consider what would happen if the Government did force them to pay up or charge less.
Today's BP numbers are big as it's a global company, and the last year has seen the oil price rocket. As a result, in just three months, BP has earned the equivalent of £100 for every man, woman and child in Britain.
It is generating £3 billion cash a month. It's buying back its shares, and raising the quarterly dividend by twothirds. In the last nine months it has made $23 billion, or about £15 billion.
Yet an oil company that cannot make massive profits under these conditions is not going to survive. Producing oil is an expensive, long-term business, with severe geological and political risks. BP expects to spend more than $21 billion (£13 billion) this year looking for, extracting and shipping the stuff. Against these numbers, BP's sales to the British motorist are tiny; only about four per cent of its global sales are in Britain; and the thirdquarter profits from them contributed less than two per cent to the total.
It would make no more sense for the Government to impose a windfall tax on BP's group profits than it would to invent a tax for Rio Tinto on the profits it makes mining in Australia.
BP's strength in the past has been in exploration and production, with marketing and refining the poor relation. It appears that at least some of the gain has come from stock profits - which could quickly reverse as oil prices tumble.
Given the political cost, low profitability and marginal nature of BP's retail presence in Britain, you have to wonder why it doesn't take its name out of the forecourts altogether.
