Hands off the profits made by fuel firms


19-02-2001

Last week saw a British company make a profit of almost 10 billion in a single year.

BP Amoco's 9.7 billion fell just short of this landmark, but was still the most that a domestic company has ever earned in a single year.



But did we cheer this historic achievement?



Of course not. In true British tradition, we love to knock our winners and BP may as well have run over the Queen Mother for all the praise it received.



Instead, the company is vilified for the 615 per second that it has made at the expense of the British motorist, the lorry drivers, the rural pensioners and the farmers.



No matter that three-quarters of the cost of a litre of petrol is tax and that the oil companies roughly merely break even on their British petrol retailing businesses.



No, they have profiteered at the expense of the public and must therefore be subject to a windfall tax in the Budget on March 7.



Illogical? Certainly, but it looks like a vote winner. Blaming the oil companies deflects public opinion away from the Government's role in the whole fuel situation and there is no doubt that a windfall tax would be a very popular decision -- for everyone except the shareholders in the oil companies and shareholders everywhere else.



BP, and Shell, have been the fortunate beneficiaries of a year when the price of oil on world markets has been very high. This does not make them villains, nor profiteers. It merely proves that they are world class businesses that have enjoyed uniquely favourable trading conditions across their broad portfolio of operations.



So who should benefit from this?



Clearly employees who have earned these profits, and also shareholders, who are the owners of the companies. Taxpayers also do, as the companies will be paying significantly more tax.



So why should the politicians intervene? No logical reason at all, unless gaining votes counts.



If this does happen in the Budget on March 7, however, it is a kick in the teeth for an astounding British achievement and is to the detriment of shareholders everywhere in this country, who know that the companies in which they have invested can only make so much profit before government takes it off them.



That is no way to run an economy.