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More call for windfall tax on oil companies

More call for windfall tax on oil companies
The oil industry's profits bonanza continued yesterday after surging prices helped Royal Dutch Shell to a surplus of almost £8billion for six months' trading.

The oil industry’s profits bonanza continued yesterday after surging prices helped Royal Dutch Shell to a surplus of almost £8billion for six months’ trading.

As with rival BP, which announced half-year profits of £6.75billion on Tuesday, higher returns in exploration and production helped Shell to offset increased cost pressures in its refining operation.

The latest profits record comes at a time when hauliers and millions of motorists face spiralling forecourt prices.

Union leaders repeated their calls for a windfall tax on the profits of both firms.

Tony Woodley, joint leader of the Unite union, said: “These latest vast profits now put the case for a windfall tax on big oil companies beyond argument.

“The government should grasp the nettle and do what it did in 1997 by taxing grotesque profits – and put the proceeds into helping the millions of people struggling with their fuel bills.”

The two companies argue they make very little money from their petrol stations. And in 2007 Shell paid global taxes of $18.7billion (£9.4billion), of which $968million (£485million) went into Treasury coffers.

The company posted earnings of $15.68billion (£7.92billion) for the first six months of the year, with the period from April to June up 5% at $7.9billion (£3.99billion).

That was better than City expectations once accounting adjustments have been included.

Shell posted a sharp rise in exploration and production profits – from $3.1billion in last year’s second quarter to $5.88billion (£2.97billion) this time.

It said the improvement reflected improved gas production volumes and the benefit of higher prices, with light sweet crude trading at more than $140 a barrel by the end of the period.

But pressure on refinery margins meant Shell’s oil products division saw second-quarter profits fall to $1.07billion (£540.4million) from $2.94billion in 2007. This was still slightly better than market hopes.

Royal Dutch Shell chief executive Jeroen van der Veer said: “This is another set of competitive earnings for Shell shareholders. Good operating performance, combined with increased oil and gas prices, offset the impact of weaker downstream conditions in the second quarter 2008.

“Shell is making substantial, targeted investments to grow the company for shareholders and help ensure that energy markets remain well supplied.”

The company made annual profits of £14billion last year – a record for a UK-listed firm. It argued the profits figure was more than matched by the amount of money it spends on securing new energy sources.

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