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Bp defends profits { February 13 2001 } Original Source Link: (May no longer be active)
http://news.bbc.co.uk/hi/english/business/newsid_1167000/1167861.stmhttp://news.bbc.co.uk/hi/english/business/newsid_1167000/1167861.stm
Tuesday, 13 February, 2001, 19:21 GMT
BP defends record £9.75bn profit
Oil giant BP has insisted it is not ripping off motorists after posting record profits of £9.75bn ($14.2bn) for 2000.
The huge profits are the highest recorded by a UK company and were made in a year which saw protestors against the high price of petrol bring the UK to a virtual standstill.
In a news conference following the unveiling of the results, BP's chief executive Sir John Browne admitted that petrol prices were a "source of concern" to motorists.
But he blamed the high level of fuel taxation in the UK.
"This is a choice by a government and governments are, of course, both able and permitted to choose," he said.
"In the UK our price before tax of petrol is the lowest in Europe," he added.
The figures follow last week's results from rival Anglo-Dutch company Shell, which reported profits of £9bn.
The oil companies have become the highway robbers of the 21st century
John Edmonds, GMB union
The oil giant Exxon Mobil has also reported profits of $17bn (£11.6bn) for the same period.
BP's profits renewed criticism that the petrol giants are ripping off motorists, leading to fresh calls for a cut in prices at the pumps.
But the company insists that it does not make money from selling petrol to motorists, emphasising that the bulk of its profits come from exploring for oil and refining it.
Cross-subsidising illegal
The marketing of petrol and the production of crude oil are run as separate businesses, and cross-subsidising between these different units is illegal.
In the UK our price before tax of petrol is the lowest in Europe
Sir John Browne, BP chief executive
If BP were to subsidise the cost of its petrol with some of the extra cash earned from selling crude oil, then that would give it an unfair advantage over other petrol sellers such as Tesco.
"There is no way that we could put oil into the system below the accepted market price," said Sir John Browne.
"It would be outlawed as predatory pricing and unfair on groups such as supermarkets," he added.
'Misery for motorists'
Critics reacted angrily to BP's record profits.
"Last week it was Shell, now it is BP and it is downright disgraceful," said Garry Russell, organiser of the Dump the Pump campaign.
"It is high time that the Chancellor looked at the oil producers because the consumer does not have a choice in all this.
"People will take a long hard look at this and expect action. If not they will take it themselves," he added.
The Road Haulage Association also pitched in.
"They (the oil companies) say they are making nothing on fuel at the pump so if this is how they fare when they are not making a profit then I dread to think how much they could make if they turned profitable," said their spokesperson Kate Gibbs.
Oil giants stand firm
But the oil companies say they are not cashing in, citing the high price of crude and increased competition among oil companies and supermarkets.
Brent crude averaged $28.5 a barrel last year, against $17.95 in 1999.
They have also tried to shift the focus of blame onto the government, citing the high level of fuel tax in the UK.
Every time a British motorist fills their tank at the pumps, about 75% of the price of a litre of unleaded fuel goes to the government.
Shell's UK refining and marketing division, responsible for managing the company's 1,100 forecourts, claims it has not made a profit for six years.
Passing the buck?
Petrol forecourt owners also say they are being hit hard.
Ray Holloway, director of the Petrol Retailers Association, has claimed that about 1,000 independent retailers went out of business last year, because they were having to pay too much for the fuel they buy from the oil companies.
These latest figures have yet again increased calls for the government to step in and hit oil giants with a windfall tax on their profits.
"The government should step in and introduce a windfall levy without delay," said GMB union general secretary John Edmonds.
"The oil companies have become the highway robbers of the 21st century, with BP claiming the mantle of a modern day Dick Turpin," he added.
However, Chancellor Gordon Brown, has played down talk of such a tax and it is highly unlikely that he will introduce it in his next budget in March.
Oil and gas make up 5% of the entire UK economy so there are fears that if a windfall tax were imposed, then the oil giants will simply shift operations to countries where the tax burden is lower.
Despite these record results for BP, the City realised that record high oil prices are unlikely to be repeated this year.
Shares in the company were down 19p at 590p at close of trade.
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