Shell profits spark call for windfall tax
Feb 1 2008 by Iain Laing, The Journal
CALLS for a windfall tax on oil companies have been reignited after Royal Dutch Shell posted record UK company profits of almost £14bn.
The Unite union said profits in the industry were “obscene” and urged the Government to take action, especially because of rising energy prices.
Royal Dutch Shell reported a surplus of £13.9bn in 2007, equivalent to £1.5m an hour and 9% higher than a year ago.
It benefited from rising crude oil prices of more than US$90, a factor which also left motorists with average petrol costs of more than £1 a litre.
Unite joint general secretary Tony Woodley said: “Shell shareholders are doing very nicely while the rest of us, the stakeholders, are paying the price and struggling.”
He added: “This Government took the brave step of putting a windfall tax on the greedy privatised utilities to fund the New Deal. With pensions injustices still to be addressed, fortune should favour the brave again and the greedy oil companies should be asked to contribute for the common good.”
Shell rejected the windfall tax calls, arguing that the profits figure is almost matched by the amount of money it spends on securing new energy sources.Most of its haul comes from exploration and production, rather than UK forecourts.
Chief executive Jeroen van der Veer described the company’s 2007 performance as “satisfactory” as Shell made progress in launching new exploration projects.
He added: “If you get additional taxation, in the end it means you can invest less. The money has to come from somewhere and over time it will impact on our production. I think that you should not only look at the profits size, but at the size of the companies and the huge investment tasks we have to do for the future of our companies.”
The oil firms, including Shell, insist they already pay high levels of tax to the Treasury. In 2005, Chancellor Gordon Brown increased a North Sea tax on energy companies from the 10% he introduced in 2002 to 20%. Independent charity the RAC Foundation said anger over rising petrol costs needed to be directed towards the Government, adding that a flexible fuel duty would compensate for varying crude prices.
Acting director Sheila Rainger said: “At the end of the day, Shell is a private company and its job is to make profit.
“The people that could do something about this are the Government. Petrol in the UK is very cheap compared with the rest of Europe when you take away tax. The problem is the 70p in the pound that goes to the Treasury. We would like to see the Treasury being a bit more creative in how it’s taxing petrol.
“We would like to see something like a fuel duty stabiliser. At the moment, whenever the price of crude goes up, the cost goes straight through to the motorist.”
