These massive profits for gas companies…

Well in the case of centrica there is the massively short sighted decision by the government to not invest in energy security and allow the Rough field to be shut down in 2017 (I think). Only to then regret that and try to hurriedly get it back online last year.

I would also try and figure out exactly which parts of their business made money before being too critical.

something to do with supply and demand, blah blah, this is how capitialism works, suck it up princess, blah blah

Maybe but its not right though is it.

(speaking as a shell share holder)

this is how capitialism works, suck it up princess, blah blah

On a general point it is my experience that people love capitalism when it delivers for THEIR benefit and the detriment of “someone else”. They are significantly less keen when it’s the other way round.

Thank you for asking this, hopefully someone can chime in with an understandable explanation. My understanding is that it was something to do with the government-imposed price cap going up, but not sure how that plays a part in tripling profits.

Edit: A brief read of news articles mentions BG's recent profits are more to do with their part-ownership of off-shore oil fields which aren't in Russia, and the UKs nuclear plants, which since the ban on Russian oil have presumably had a surge in interest. i.e. government money, given to British energy companies instead of Russian - so might not be such a bad thing after all.

In simple terms the cost of getting oil and gas out of the ground hasn’t changed, so all the energy companies that have drilling operations have seen their product prices go through the roof for the reasons described and no material changes to their cost of extracting it = happy days for Directors and Shareholders. Its a bit different for retailers of energy who dont have a production side as they rely on making a margin on the gap between wholesale and retail price

We did this to death and beyond only last week...

https://singletrackmag.com/forum/topic/23bn-profit-for-bp/

What am I missing?

Nothing.

No essential services should be in private hands. End of.

If you want to understand where the money came from then read their full results at the link below.

https://www.londonstockexchange.com/news-article/CNA/final-results/15839463

Centrica has different divisions which make money is different ways, e.g. British Gas made £72 million profit but the nuclear division made £724 million. So British Gas made, on average, 8 quid profit per customer (which I would have said is reasonable).

The important point is that it's the market that sets the price of energy, not the energy companies. The real problem is with how energy is priced (and supplied) in the UK and ultimately that is the responsibility of the government, so the sensible thing (IMO) would be to vent your anger in their direction.

It's not one company. The suppliers to you and me are not the companies who have the extraction licenses and selling on the wholesale market.

On a general point it is my experience that people love capitalism socialism when it delivers for THEIR benefit and the detriment of “someone else”. They are significantly less keen when it’s the other way round.

In my experience, Socialists prefer a system which benefits society as a whole, rather than one which allows people to make obscene amounts of money whilst demonising and punishing the poorest.

Ok, so I appreciate my question was fairly simplistic, and things like not being able to sell to British gas complicates things. But ultimately my bills to British gas are going through the roof whilst the company that owns them are making massive profits

This ‘different division’ arguement is nonsense. They are ultimately one company, just because one sub part of it isn’t as profitable as others, the the shareholders hold shares of the parent company, and are raking it in

Bottom line is that my gas bill has doubled, whilst the company that I pay that money to has had their profits triple..clearly they don’t need to be charging me double what they did last year . It’s greed pure and simple

The UK energy market is "a bit of a mess", isn't it. Ultimately, it's down to the government to sort out.

So your actual question is “why won’t companies subsidise me?” That would be a cross subsidy which I think is anti competitive and probably illegal. You could also work out how much profit these companies make in their U.K. operations then don’t vide that by the number of customers they have to see how much everyone would receive. I’ll bet the number is MUCH smaller than you think.

This ‘different division’ arguement is nonsense. They are ultimately one company, just because one sub part of it isn’t as profitable as others, the the shareholders hold shares of the parent company, and are raking it in

But as pointed out the wholesale market determines the price they sell at, this is pegged to gas so nuclear is cleaning up. As said, don't hate the player, hate the game.

short sighted decision by the government to not invest in energy security sell off our utilities.

Fixed it for the children above.

Basically it still costs the same amount to extract from the ground, refine and distribute.
But the market price has increased due to less supply in the global market due to excluding Russian supply
Therefore profits go up.

You also need to separate the producing parts of the business from the distributing parts.

So far so good, but today the gas company profits triple. This bit I’m not fully understanding. Other than the bit where shareholders are profiting whilst poor folks go cold

Obviously that’s a simplified version and I understand there are various parties involved, What am I missing?

Pretty much, they have an asset, it's value's gone up, they're selling it.

Now compare it to the 63% of British households that own their own home. Are they responsible for homelessness as they benefit from house price inflation? Or is it the governments fault for selling of national infrastructure (British Gas and council housing).

In my experience, Socialists prefer a system which benefits society as a whole, rather than one which allows people to make obscene amounts of money whilst demonising and punishing the poorest.

The trouble with this self identifying lefty forum is that they only like the idea up until their champagne* get's taken away.

*expensive single malt and the injustice of the incremental tax rate on people earning just over £100k.

Centrica has different divisions which make money is different ways, e.g. British Gas made £72 million profit but the nuclear division made £724 million. So British Gas made, on average, 8 quid profit per customer (which I would have said is reasonable).

I would agree were it not for the fact that British Gas buy all their gas from Centrica so the declared profit for British Gas is a made up number to suit the company for either tax, or in this case PR purposes. One of the benefits of being a vertically integrated group is you can declare the profits anywhere in the stack that best suits you at any given time

I would agree were it not for the fact that British Gas buy all their gas from Centrica so the declared profit for British Gas is a made up number to suit the company for either tax, or in this case PR purposes. One of the benefits of being a vertically integrated group is you can declare the profits anywhere in the stack that best suits you at any given time

There's a bit of inuendo doing the rounds that British Gas seems to make some suspiciously good calls on when to buy gas futures. But fundamentally they're on an open market, anyone else could buy those futures for the same prices but for whatever reason doesn't have access to as good information.

One of the benefits of being a vertically integrated group is you can declare the profits anywhere in the stack that best suits you at any given time

That might be possible in some industries but not in oil and gas extraction. Taxes are levied based on production from individual fields and cannot be transferred anywhere else. Not even other parts of an upstream business. That way the higher corporation tax as well as the additional windfall taxes cannot be avoided by the oil producing companies.

That might be possible in some industries but not in oil and gas extraction. Taxes are levied based on production from individual fields and cannot be transferred anywhere else. Not even other parts of an upstream business. That way the higher corporation tax as well as the additional windfall taxes cannot be avoided by the oil producing companies.

There are a myriad of ways they could do it even if they couldn’t use the price Centrica sell the gas to British Gas. There will be alsorts of contracts between the 2 parts of the group for alsorts of services they internally trade from corporate services, insurance, branding, building leases etc etc.

There are a myriad of ways they could do it even if they couldn’t use the price Centrica sell the gas to British Gas. There will be alsorts of contracts between the 2 parts of the group for alsorts of services they internally trade from corporate services, insurance, branding, building leases etc etc

Sounds like pure hearsay to me. Amd even if they made 80 quid off each customer instead of 8 my original points still stand. Getting angry at Centrica is waste of time. They are operating within the framework set by the government.

There are a myriad of ways they could do it even if they couldn’t use the price Centrica sell the gas to British Gas. There will be alsorts of contracts between the 2 parts of the group for alsorts of services they internally trade from corporate services, insurance, branding, building leases etc etc.

O&G companies can't move profit around in the same way as thie like of Facebook, apple, Amazon, Google etc. Laws were written to specifically stop this from happening and beleive me they are pretty tightly controlled. Whilst legitamat charges like staffing, building costs etc are obviouly allowed this is all pretty minor. the other thing to consider is that it is very rare for an oil company to onwn the production rights of a field outright. There are generally partners, other O&G companies, so shifting all tha profit around would effectively "steal it" from the partners and they wouldn't be happy about that at all.

the set up of O&G extraction is not like other industries and the same rules do not apply.

I’d encourage everyone to go and check what their pension funds (if they have them) are invested in, before deciding it you like these companies making a profit.

bensales
Free Member

I’d encourage everyone to go and check what their pension funds (if they have them) are invested in, before deciding it you like these companies making a profit.

Yeah, nice little boost for people with massive pensions.

Shame about the poor buggers who had no spare money before the gas/elec prices skyrocketed let alone now, therefore put eff all into their pension.

Chew
Free Member
Basically it still costs the same amount to extract from the ground, refine and distribute.

I keep hearing this,....got any sources ?

Shame about the poor buggers who had no spare money before the gas/elec prices skyrocketed let alone now, therefore put eff all into their pension.

indeed.

I have a private pension, I’m lucky. The people hardest hit by the price rises (that doesn’t include me despite starting this topic) won’t have a bean, certainly they won’t have fat pension pots. They are the ones getting their doors knocked down by a company making billions

I’m doubting that those who are suffering the most from this have pension funds to go and check tbh. Peak STW comment up there

I keep hearing this,….got any sources ?

I doubt it's changed substantially year on year.

Unless your shell's accountant, in which case conventiently all your decomisssioning costs were last year.

https://twitter.com/MarinaPurkiss/status/1626119176036265984?t=lqszRr6P1K****aWh3dUtrA&s=19