Rocketing oil and gas prices helped BP to bumper profits yesterday as motorists continue to feel the pain at the petrol pumps.
The oil giant posted half-year profits of $13.44billion (£6.75billion) – 23% up on the previous year – as the firm reaped the benefit of record prices.
Between April and June, the company made underlying profits of $8.6billion (£4.3billion) – almost £2million an hour and 56% ahead of the same period last year.
The results – which shattered City expectations – were driven by soaring crude oil prices, which finished June at nearly $144 a barrel.
But motorists suffered an average 10p rise in the price of a litre of petrol to 118.2p over the period, with average diesel prices more than 14p up at 131.6p, the AA said.
BP’s exploration and production business boosted profits 55% “primarily due to higher oil and gas realisations” – higher selling prices.
While the oil major will plough around £11billion back into capital expenditure and exploring for new sources of oil and gas this year, the profits will add to anger among hauliers and drivers over soaring costs.
Union leaders have called for a windfall tax on the profits of both BP and fellow major Royal Dutch Shell.
Tony Woodley, joint leader of Unite, said: “While ordinary people struggle to make ends meet, BP’s boardroom is wading through knee-deep profits.
“It is high time our government moved to stop the fuel corporates picking the pockets of the poor and needy.”
BP, however, says that it makes less than 1p in profit on every litre of petrol it sells at its 1,300 filling stations across the UK.
In response to calls for a windfall tax, the company adds that it paid $14.5billion (£7.3billion) in taxes worldwide last year – of which $2.33billion (£1.17 billion) was in the UK.
In refining and marketing, earnings for the three months to June 30 were down to $539million (£271m) from $2.74billion a year earlier.
It said higher energy costs continued to impact margins in the division despite an improved performance from its US refineries, which have struggled in recent years.
Under chief executive Tony Hayward – who took over from Lord Browne last year – the group has been looking to boost efficiency to close the gap on fellow oil giant Royal Dutch Shell. In February, the company announced plans to cull 5,000 of its 97,000 employees to help streamline the business.
BP’s profits tumbled by more than a fifth to $17.29billion (£8.76billion) last year as the refining issues dogged the business, although City experts said yesterday’s figures showed more signs of a turnaround.
Richard Hunter, head of equities at stockbroker Hargreaves Lansdown said: “These are another set of exceptionally strong numbers, echoing the first quarter performance.
“Given the tailwind of historically high energy prices, this is somewhat to be expected, although such a strong successive quarterly performance could signal a marked turnaround in the group’s fortunes.”
A row over BP’s Russian joint venture TNK-BP is currently overshadowing the group. TNK-BP chief executive Robert Dudley last week left Russia due to “sustained harassment” following the dispute between the venture’s Russian shareholders and BP management and has been running the business from a secret location.
The dispute is a serious one for the oil major as TNK-BP accounts for a fifth of the group’s reserves and a fifth of production.
