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Times Online: Shell deserves congratulations, not catcalls

As the oil giant's record-breaking annual profit draws criticism from all sides, Graham Searjeant asks: what's our problem?
Rationally, we should be celebrating the highest profit ever reported by a British, or at least partly British, company. The newly merged Royal Dutch Shell, the world’s third biggest stock market listed oil group, made $22.94 billion last year, equivalent to £12.9 billion at today’s exchange rate, although it is soon likely to be eclipsed by BP, the second biggest.
The biggest beneficiaries will be people working right across the private sector, whose pension funds are the dominant holders of Shell shares. They should benefit directly from dividends to the funds, from reinvestment of undistributed profits and, more obliquely, by Shell buying back $6 billion worth of its own shares to reduce the supply. From Aberdeen to Amsterdam, ordinary people’s retirement prospects are a little better thanks to Shell.
But this is Britain so, instead of celebration, Shell’s announcement was greeted by a ritual chorus of boos and catcalls from all sides.
Consumer groups, echoing anger at high oil prices, charged Shell with profiteering and claimed it had single-handedly pushed a million vulnerable British people into fuel poverty, even if its main business is oil, rather than gas. The head of the Transport and General Workers Union bizarrely urged the government to impose a windfall tax in order to help the “pensions crisis”.
Environmental groups such as Friends of the Earth complained that Shell was evilly profiting from climate change, so a windfall tax should be levied to invest in alternative energy sources. Perhaps the money would come from the investment Shell itself is making in renewables, not least in the ethanol technology newly favoured by President Bush.
In a similar vein, the Amicus union, which also favours more tax on Shell, demanded more investment in the North Sea. Yet the Chancellor has already announced an extra 10 per cent tax on North Sea profits and , as a sadly predictable result, Shell has cut its investment plans for the North Sea in favour of other oil provinces.
Even the City was chippy and unhappy. Analysts complained that Shell’s profits were not as buoyant as those of Exxon Mobil, the industry’s number 1, whose results produce hand-wringing in America but little criticism here. Profits in the October to December quarter fell below City forecasts, a deadly sin; payouts should have been higher and Shell’s record at finding oil , though much improved last year, was still not good enough to replace what it took out of the ground. So the shares fell as much as 2 per cent.
The pension funds that own Shell have certainly benefited enormously from the high price of oil, which had nothing to do with their own or Shell’s efforts.
By the same token, Shell is hardly to blame. Opec is a cartel dedicated to keeping oil prices high, so that the money can feed the state coffers of Saudi Arabia, Iran, Indonesia, Nigeria, Algeria, Venezuela, Kuwait and the Gulf states, where not a little is wasted in excess, war or corruption. Gazprom, the state-controlled Russian gas giant, has consciously imposed higher prices on key customers for political purposes. In the UK, we as taxpayers have gained more from higher oil prices than Shell because of the higher VAT on fuel, let alone taxes on North Sea activity.
Profit that is publicly announced, not just counted in private, is the easiest target for our discontent. If Shell wants to avoid the flak, it had better arrange for itself to be taken over by the Iranian government. Don’t be a British company with shares quoted on the stock exchange.

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