Daily Telegraph (UK): Oil industry heavies are vital to the nation: “Shell and BP have a stock market value of more than £160 billion, make more than £15 billion of profits a year, and employ 26,000 people in Britain.” (ShellNews.net) Posted 5 February 05
By Malcolm Moore, Economics Correspondent
(Filed: 04/02/2005)
Shell and BP have a stock market value of more than £160 billion, make more than £15 billion of profits a year, and employ 26,000 people in Britain.
The two companies are vital to the nation's economy, both in terms of the jobs and revenues they create and because of the importance of having a secure supply of oil and gas.
Between them, they contribute an estimated £13 billion in income tax, customs and excise duties and North Sea corporation tax to the public coffers. Two out of every £10 that pension funds and other investment trusts receive in dividends comes from BP and Shell.
On top of that, the Chancellor takes three-quarters of the price of every litre of fuel sold at the 950 Shell and 1,200 BP petrol stations. Motorists may be furious at the record profits being declared by BP and Shell but, after removing the tax, Britain has the lowest petrol prices in Europe.
The two companies may not generate as much money for the country now that the heyday of North Sea oil is drawing to a close, or employ as many staff, but their strategic importance is as large as ever.
BP and Shell have both bailed out the British economy in the past. In the run-up to the First World War, Winston Churchill struck a deal with BP, then Anglo-Persian Oil, to pay £2 million for a government stake in the company. That ensured that Britain would have secure supplies of oil during the war, and a toe-hold in the Middle East.
During the Second World War, Marcus Samuel, the head of Shell, co-ordinated oil supplies to the Allies. Shell workers in Indonesia played a vital role in destroying oil wells that the Japanese were aiming to capture. When the world was crippled by the refusal of the Middle East to supply oil in the 1970s, the two companies secretly supplied Britain.
Since then, Britain has not had to rely on foreign oil. The bonanza in the North Sea, and the investments in the region that Shell and BP undertook, made the country self-sufficient.
Now Britain is on the verge of losing that self-sufficiency, it is vital to have two oil companies that can guarantee efficient supplies. "Shell and BP have a huge number of relationships with almost every government in the world. Their global investments maintain a constant supply of oil in the UK," said one analyst.
Indeed, if the events of the past ever repeat themselves, BP and Shell could quite conceivably cut off supplies to Britain's enemies and maintain flows to allies. The world's dependence on oil is enriching regimes that are usually thought of as enemies of the West.
Thanks to high oil prices, the mullahs in Iran have several more billions to spend. Shell and BP go some way towards redressing the balance, as they pour cash into the British economy, and give the country greater independence from Middle-Eastern oil thanks to their investments elsewhere in the world. However, in the case of another oil embargo, the usefulness of British oil companies is limited. A spokesman for BP said: "We would not be able to do what we did then under the new European Union rules."
He was also dismissive of accusations from motorists that oil companies were fat cats in keeping pump prices high while making record profits.
"You are obliged to charge the market rate because each bit of the oil industry has its own markets," he said. "We have to buy and sell to ourselves at this internationally-established market price.
"We cannot subsidise the pumps because we cannot sell to ourselves more cheaply than to everybody else or we would put the supermarkets out of business."
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