Oil and Gas companies profits

Shell’s retail energy business in the Uk has lost so much money (around £1/4b over two years) they are looking at selling it or shutting it down.

The energy windfall tax is also now resulting in O&G companies winding back further capital investment in the UK.

The energy windfall tax is also now resulting in O&G companies winding back further capital investment in the UK.

Can't say I care and I'll wave them goodbye.

Eventually someone will replace them who'll work (begrudgingly or not) under and fairer and more sensible system.

Apply this to any stupid, exploitative system and we'll end up with a better world.

Can’t say I care and I’ll wave them goodbye.

Eventually someone will replace them who’ll work (begrudgingly or not) under and fairer and more sensible

I don't think they will, it will bring forward decomissioning dates, we'll lose the infrastructure and then be wholly dependent on imports. We'll lose the tax take on domestic production.

Eventually someone will replace them who’ll work (begrudgingly or not) under and fairer and more sensible system

I think history has taught us differently. Any seemingly more ethical energy company coming in would still be beholden to shareholders and their interests aren't in line with running a company in the way that would make any meaningful difference.

I hope you're in favour of price support as well when the price inevitably collapses? It's a very boom/bust industry

Any seemingly more ethical energy company coming in would still be beholden to shareholders and their interests aren’t in line with running a company in the way that would make any meaningful difference.

There is little to stop an energy company being run as Yvon Chouinard ran Patagonia. Not really. Shareholders and greed isn't an essential part of business and not every rich person is a self-centred *. Generally that world attracts *s but an alternative could find a lot of support (as well as a lot of barriers put up initially). Idealistic, yeah maybe.

True story

A few years back I stayed at a very nice holiday cottage in france run by a mid 30’s English couple in the grounds of their mansion

He was an ex oil trader, even back then he said that trading was not done ethically but just to make them as traders and interested parties as much money as possible. He got out as it didn’t sit with his ethics…once he had quite clearly made enough money

I used to work in finance for British Gas/Centrica 15 ish years ago. They were actively encouraging pre payment metres then and in fact they made shed loads of money from them.

Also they had supply side (oil) which BG then had to purchase on the open market. Accounting was supposedly to be regulatory separated to avoid insider dealing, but it would be uncanny how BG managed to secure supply at good forecast rates many years in advance

Barriers to entry are very high and continued market consolidation means that '...somone will replace them' is a non-starter.

yeah it a funny old carry on, as funkydunc says, BG with centrica supplying the fuel and making the mass profits,
octopus energy keep saying how they are looking after the consumer, octopus energy group have over the last decade started buying up windfarms and the like. then selling this energy at market rates to the octopus we know, who sell on to us.

very little stockmarket trading is actually supporting business (IPOs to raise capital etc) its all secondary market, were gamblers/investors want a return on their bet.

BP results out next week, they'll be publishing similiar, theirs even talk they are a potential buy out target.

Barriers to entry are very high and continued market consolidation means that ‘…somone will replace them’ is a non-starter.

Don't enter the same market then. It's a dying market anyway (dying market or dying planet). Alternatives may come from change of direction in the current companies, or new companies. But that's going OT.

During COVID when crude futures went negative oil still flowed and was refined into end products. No one asked for support then, Divi cut for shareholders.

Now super profits being generated, Divi still not restored to pre COVID levels.

Shell share price been range bound for 25 years, us stocks on a much higher rating. Shell is a quality global company they could move hq tomorrow.

He was an ex oil trader, even back then he said that trading was not done ethically but just to make them as traders and interested parties as much money as possible. He got out as it didn’t sit with his ethics…once he had quite clearly made enough money

🤔🙄😡

Then saying it’s mainly due to exploration but that the profit will be ploughed into R&D for alternative energy!

I saw an explanation of an oil companies business model many years ago, basically the exploration makes money because of the charges it makes to the drilling, the processing and then retail branches, because that is where the tax benefits are. They can basically change the charge structure to any part of the business they want to minimize tax. And of course it allows them to obfuscate arguments about profit.

Then saying it’s mainly due to exploration but that the profit will be ploughed into R&D for alternative energy!

I read yesterday that shell spend more on marketing, than they do on alt energy r&d - no idea if this is true as there was no evidence to back it up.

I saw an explanation of an oil companies business model many years ago, basically the exploration makes money because of the charges it makes to the drilling, the processing and then retail branches, because that is where the tax benefits are. They can basically change the charge structure to any part of the business they want to minimize tax. And of course it allows them to obfuscate arguments about profit.

Nope. Oil is a globally traded commodity and there are plenty of companies that produce it but don't refine and plenty of others who refine it but don't produce it. the Exxon, BP, Shell, Total combined don't have enough market share to move the market. That's the presevere of the national oil companies. Lets be under no illusions though, since the the 1970s North Sea oil production has paid tax at eyewatering rates to the UK government. Over 70% once you add all the taxes together so we've had our fair share of that wealth but those boom days are over. Much of the upcoming decomissioning costs will be paid for not by the oil companies but by the UK plc.

The only real long term alternative is Nuclear and that makes oil exploration look cheap....

Consider - for UK registered companies - let's say for FTSE 100 - and their market sectors, their profits and tax payments made for last reported financial year. Be interesting to look at. If all companies are paying taxes of >70% on their profits, then great, but if not, you have to ask why...

Unfortunately, the world will continue to rely upon hydrocarbons for some time (look around you...) and the UK has a choice - produce what we have as environmentally friendly as absolutely possible - or simply consume from overseas, where environmental considerations may be less and conveniently overlook the environmental impacts of getting it here. Yes, I recognise that UK oil and gas goes overseas and overseas comes to UK - the challenge of if not being a homogeneous product and hence refineries are set-up to work best with certain specs. Also consider the tax take to the UK from all those employed - directly or indirectly - to support the hydrocarbon industry in the UK.

Also consider what Ukraine war has identified as energy security issues...stop UK and rely more on overseas imports..??

I don't think anyone would argue that a move from fossil fuels to true sustainable is required, but I struggle to see a real path to that, where it appears that any industry to build turbines, solar are basically elsewhere - correct me if I am wrong, but what have the UK and devolved governments done to tangibly support the creation of such an industry, providing valuable 'real' jobs with tech opportunities, etc, etc? Battery factories in the UK...oops, no...but conveniently overlooking the environmental impacts of the raw material mining.

Also, there is simply not the infrastructure in place to support EV usage at this time. The cost of change for consumers is also prohibitive, considering the back-drop of inflation. I'd happily install solar panels, own an EV but the cost to do so means it's not possible.

As said above, as the commodities these companies produce are globally traded then if increased profits on 'excess' then support when commodity prices crater?

I’d happily install solar panels, own an EV but the cost to do so means it’s not possible.

Only works well on sunny days though, so you still need Gas or Nuclear to provide power when there's no wind or sun....

Gas companies are some of the biggest supporters of wind power as for every GW of wind power installed, we install a GW of gas to provide power when the wind isn't blowing....

Eh? My mate's Tesla even works at night !! 🙂

Eventually someone will replace them who’ll work (begrudgingly or not) under and fairer and more sensible system

I think history has taught us differently. Any seemingly more ethical energy company coming in would still be beholden to shareholders and their interests aren’t in line with running a company in the way that would make any meaningful difference.

Again though. I'll refer to my last point.

Apply this to any stupid, exploitative system and we’ll end up with a better world.

I know I'm being idealistic but we need big changes across society.

Anything else is just delaying the inevitable collapse into some Orwellian distopia...

The change to EV is a challenge, but assume that I already have an older but still good diesel fully paid for vehicle which is used for multiple duties, including towing trailer, horse trailer for daughter and friends, which I then look to replace with an EV.

So, limited to a Tesla Model X. Sadly, I do not have a minimum of what, £70k to buy one or £800+ per month to lease particularly when considering impacts of general inflation.

Regardless, I would have to consider range, charge-points, speed to charge, etc, etc. Living in a rural community, charge-point would be either at home or trying to find one in the sticks which is actually working.

I'd also be happy to have a Tesla or similar battery storage system installed at home, but again, cost to do so is a tad prohibitive.

'One size' certainly does not fit all.

The energy windfall tax is also now resulting in O&G companies winding back further capital investment in the UK.

Good riddance. We need to stop using fossil fuels asap, and the oil and gas companies are not going to help with that.

OK, if hydrocarbons cease to be produced in UK and the population as a whole does not materially reduce consumption patterns (direct and indirect in terms of plastics, etc, etc) then what?

What have you/we personally done to reduce your consumption of hydrocarbons - direct and indirect?

The energy windfall tax is also now resulting in O&G companies winding back further capital investment in the UK.

Good riddance. We need to stop using fossil fuels asap, and the oil and gas companies are not going to help with that.

That’s pretty simplistic.

What you are actually advocating is the loss of tens of thousands of high paying / skilled engineering jobs and £billions of employment taxes.

What follows is the loss of UK corporation tax receipts that will be in the region of £25b (from shell and bp) this year alone.

Longer term the Uk will have less engineers so the effect will ripple out to universities and other industries.

None of this will alter the amount of oil and gas we use - it will just increase supply risk, carbon emissions (more shipping) and increase the cost of energy to consumers.

The £bs in tax will of course need to be replaced - based on £30-50B loss in tax a year that’s £1k more tax for every household - every year.

What you are actually advocating is the loss of tens of thousands of high paying / skilled engineering jobs and £billions of employment taxes.

Or maybe he is advocating for highly skilled high paying jobs in renewable energy.

Yes, but as above, where in the UK is this actually happening on any scale at all?

Or maybe he is advocating for highly skilled high paying jobs in renewable energy.

Indeed. All the skills are transferrable, and the investment can be found, we just need the political and commercial will to do it, and so far the O&G companies have proven that they are more interested in investing further in fossil fuels. Cheddar's points are simply the usual 'but what about the jobs and money' excuses for continuing with the suicidal status quo. Jobs and skills can be moved, transferred, or replaced. Money can be found from somewhere else. if the O&G companies aren't going to do it, then someone else has to.

None of this will alter the amount of oil and gas we use – it will just increase supply risk, carbon emissions (more shipping) and increase the cost of energy to consumers.

Nonsense. If we generate more energy from renewables then the amount of oil and gas we use will reduce, but we need to reduce the amount of fossil fuels first to stimulate the demand. We'll never generate enough energy from renewables to achieve net zero until the oil and gas companies are put out of business (or at least declining). If they refuse to switch to renewables then that's their own choice, other companies will meet the demand instead.

Yes, but as above, where in the UK is this actually happening on any scale at all?

Just because it isn't happening now doesn't mean it couldn't. In fact one of the highlights of the labour conference was a plan to do just that.