Royal Dutch Shell Group .com Rotating Header Image

The Guardian: Shell under fire as oil price boom results in UK's biggest ever profit

CEO denies profiteering at expense of consumers Unions, activists and buyers call for windfall tax
Terry Macalister
Friday February 3, 2006
Shell yesterday announced the biggest ever profits by a British company – £1.5m an hour – on the back of soaring oil prices and came under immediate attack from consumers, trade unions and green groups.
Chief executive Jeroen van der Veer insisted the company was not profiteering on the back of the UK motorist or gas consumer, saying 90% of its profits came from abroad. “Our profits come out of 140 countries where we are. It's not true to say that all $23bn [£13bn] came out of the UK,” he said, claiming later that the UK figure was below $2.3bn.
The company also said $1.2bn had been paid to the British Treasury in tax, almost double the amount for 2004. And that was before a recent tax rise by the chancellor which had not yet kicked in, it said.
Shell plans to hand back £3bn of the £13bn profits to investors through share buybacks over the next 12 months.
The earnings were up 30% on 2004 but shares fell 2.5% to 1956p as some figures disappointed the City. There was particular concern that Shell had only replaced up to 70% of its reserves year-on-year, while oil and gas production fell from 3.7m barrels a day to 3.5bn.
The oil group tried to head off wider criticism by saying the profits resulted from long-term investments, for instance in the North Sea. But this did not impress the trade unions.
“It is high time the government acted decisively and brought in a proper windfall tax,” said Tony Woodley, general secretary of the T&GWU. “At a stroke a windfall tax could strengthen the Financial Assistance Scheme and put some backbone into the Pension Protection Fund.”

Fellow union Amicus described the figures as “obscene” and said it undermined the “huff and puff” of the oil industry over the November tax hike by Gordon Brown.

Meanwhile fuel poverty activists argued that Shell's profits came at the expense of one million more households falling into fuel poverty.
“Continuing domestic energy price rises will lead to a major increase in the number of households struggling to pay their bills, or paying the health and social costs of living in cold, damp homes,” said William Gillis, chief executive of National Energy Action. “NEA urges Shell to consider gas consumers who are facing debt and cold homes this winter and to dedicate more of their profits to poor communities and practical energy saving programmes.”
Shell is a major supplier of gas to the wholesale market but Mr van der Veer was unable to say exactly how much his company had earned from this business.
The Road Haulage Association also joined in the attack on Shell, urging the government to “take a little more” from the oil companies and use the cash to reduce fuel tax for road transport operators.
“Shell has benefited from high global prices; meanwhile road hauliers dependent on the corresponding high price of diesel can barely make ends meet,” said chief executive Roger King.
And Friends of the Earth also called for higher taxes, saying everyone else was paying the price for Shell's profits.
“Oil companies must be forced to face up to their wider responsibilities on climate change, on the environment and on human rights. Shell claims the costs are too great to protect the western Pacific whale – and yet again announced record profits,” said FoE's head of corporate accountability, Craig Bennett.
The Shell boss described the financial performance of the group as good and said it gave the company a “solid platform” to build on during 2006. He said oil and gas production was in line with expectations, given the impact of hurricanes in the US Gulf. After a very turbulent 2004 on the back of reserves downgrades, Mr van der Veer said Shell's position was “solid”.
The £13bn-plus profit reported by Shell catapults it above banking giant HSBC, which last year set a new record when it broke through the £10bn barrier for the first time in British corporate history. The two firms have been playing leapfrog, with Shell briefly taking the record a year ago with profits of £9.4bn, only to be trumped by HSBC a couple of weeks later. But the surge reported by Shell yesterday looks likely to see it retain the record this year. Though HSBC and BP have yet to report their 2005 figures, analysts do not expect them to top Shell's numbers.

This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

Comments are closed.