BP and Shell in the week just gone announced record profits at the same time as prices at the pump increased.

“Shell and BP made a combined £7.2billion profit in just three months…” reported the Telegraph in the UK. This is “…the equivalent of £3.3million per hour.”

We think we have it bad in New Zealand paying $1.88 a litre. Converting that to gallons, so we can make a UK comparison, that equals $8.50 a gallon. In the UK motorists $12.76 a gallon, or 50% more than us. And they are closer to the oil fields.

It costs a lot to drill for oil. First you have to find the damn stuff, then you have to refine it and turn it into petrol or diesel. So we shouldn’t bregrudge them their profits, except if their profits come off low production costs. That’s when it becomes obscene.

In the UK the Labour Government taxes petrol so much that over 65% of the price at pump returns to them. We consider the 35% in taxes and levies here in New Zealand excessive. Is the government investing that money back into research on alternative fuels, or does it return to the general coffers?

3 thoughts on “Petrol company profits”

  1. This has been covered a lot on the news here as oil is getting to ridiculous prices. The Labour Government in England a few years ago openly stated that oil tax revenues were to be used for the NHS and school systems. One could argue that then frees up money in other parts of the government to wage war but the rhetoric is at least there. Tax the behaviour you don’t want to encourage behaviour that you do. Now if only as you stated it was being put somewhat into renewables.

  2. Good questions. I make the NZ tax component a bit higher at about 42%.

    Not sure the government is investing the financial windfall wisely.

    But back to the oil companies – some like BP seem to be repositioning themselves as an energy company – although so far that looks like PR posturing.

    The old strategy question of what business are you in? – is a good question for oil companies.

Comments are closed.