Shell's Profits Called "Obscene", Shell Exec Promises to Do Better

The Guardian (UK) reports on the record profits the oil companies are making. Nevertheless, Shell's CEO is promising investors he's working on plans to keep increasing their slice of the pie. Too much is never enough.

Shell was today accused of making "obscene" profits at a time when pensioners, motorists and industry are struggling with higher energy prices when it unveiled annual earnings of $27.6bn.

The oil major has made British corporate history with the record figures, which are equivalent to more than ($3 an hour) and come at the end of a three month period when crude prices have averaged over $90 a barrel.

Jeroen van der Veer, chief executive of Royal Dutch Shell, described the performance as "satisfactory" and admitted that overall production for the year had actually dropped 2%.

He said the company had benefited from launching new oil and gas projects but had suffered in the last quarter from weak refining margins.

"We are proceeding with the rejuvenation of our portfolio with investment in new legacy assets and through disposals. The execution of our strategy is on track."

But Tony Woodley, joint general secretary of Unite the union, Britain's largest trade union said a windfall tax should be imposed on "greedy" companies such as Shell whose profits are more than four times higher than retailer, Tesco.

"Shell shareholders are doing very nicely whilst the rest of us, the stakeholders, are paying the price and struggling," said Mr. Woodley. "Record profits of over thirteen and a half billion pounds at Shell and cumulative oil industry profits in excess of fifty billion in the last three years are, quite frankly, obscene. It is time the government acted."

Where Do Oil Company Profits Go?

Raw Story reports on the surging profits enjoyed by oil companies even as the economy slides into recession.

Unlike oil companies, who take a percentage of pump prices, government gas taxes are fixed so the government does not profit from rising prices, Krullwich reports. Gas taxes make up about a quarter of that extra dollar spent for a gallon of gas, he says. The rest is split among refineries, tankers, pipelines, traders and others who get oil to consumers.

The record prices of 2007, though, were not accompanied by fears of a US recession that are currently reverberating through the global economy. Those fears triggered a drop in oil prices Tuesday to $89.85 a barrel, the lowest it has been for more than a month.

They also feature an enlightening video from ABC News:

Companies expecting record profits, but recession fears cause decrease in oil prices

In an animated Web video that plays a bit like "School House Rock" without the catchy theme song, ABC News explains where the extra money Americans are putting into their gas tanks actually goes.

"Compared to three years ago, Americans are now paying an extra dollar for every gallon of gas, and if you're wondering where those extra dollars go, well for every dollar you pay, about half goes to the oil company that pumped the oil," reports correspondent Robert Krulwich. Accompanying animation shows a suit-wearing, suspicious looking "oil company guy" tearing away half of a dollar bill.

The short feature is indicative of Krulwich's style; he's been called "the man who simplifies without being simple," by New York magazine.

Hillary Takes the Pledge?

Sen. Clinton spoke out about the stranglehold that the oil companies have us locked in. It's reasonable to conclude that if they collude on prices that they also collude on whether or not to avoid paying their fair royalties on petroleum taken off public lands.



Here is a transcript of Senator Clinton's comments on the video:

I’ll tell you what. In my inaugural speech, I’m going to serve notice on the oil companies and on the oil producing countries: that we are not going to be taken advantage of any longer, that we are going to once again be in charge of our future.

And I can tell you what’ll happen.

You know, the oil producing countries and the oil companies will have a conversation. They have a cartel in case you haven’t noticed.

And they’ll drop the price of oil because they figure they’ve done it before, they’ll do it again. They’ll take the political heat off. Everybody will say “Oh, great, did you see how much the gas price has fallen? Oh, we don’t have to worry about this anymore.”

It’s like the old story about how to boil a frog. You drop a frog in boiling water, it jumps right out. You drop it in cold water, you turn the heat up – you’ve got a boiled frog before too long. We have been the boiled frog in this story, for decades.

Well, not on my watch. We are going to get out of that pan and we’re going to be back in charge. And we’re going to show the world what we can do when we put our minds to it.

Rep. Markey Blasts New Give Aways from the MMService

The Houston Chronicle reported on this over the holiday:

A rule change proposed by the U.S. Interior Department could cost taxpayers $10 billion in lost royalty payments from oil and natural gas companies, a lawmaker says.

"The Bush administration couldn't leave town for the holidays without giving one last taxpayer-funded gift to Big Oil," Rep. Edward Markey, D-Mass., said Friday in a statement. The total loss in revenue would be over 26 years, according to the statement.

The Minerals Management Service, which oversees royalty payments for the Interior Department, issued a proposed rule Friday that it said would conform payments for leases in the Outer Continental Shelf to a 2004 federal court ruling.

The court found leases couldn't be excluded from royalty relief if they were part of a field that was producing before the 1995 act went into effect. That legislation offered relief from royalty payments for companies drilling in deep waters of the Gulf of Mexico in an effort to spur development.

The rule is open for public comment until Feb. 19.

The rule change is unrelated to an Oct. 30 court ruling the department lost to Kerr-McGee, a subsidiary of Anadarko Petroleum Corp.