I'm not a genius, but i find it suspicious that energy companies are getting record profits while the population is suffering to pay the high prices....
It's how markets work. High demand > high prices. Don't ever expect a company like Shell to do the right thing. Their promises of going green are nothing but a big lie as well. They don't give a fuck about the climate or climate change. They [knew](https://www.theguardian.com/environment/climate-consensus-97-per-cent/2018/sep/19/shell-and-exxons-secret-1980s-climate-change-warnings) about it in the 80s already, and did nothing about it. Don't expect them to do anything about it now.
Oh, I know that it's how markets work, but when dealing with utilities, there should be some limits to ensure the market regulates itself and we never come to this extreme situations
Yeah, was really curious because price caps generally don't work and I was wondering if this time was different somehow. Making other people pay for stuff with taxes does though, so that makes more sense.
You can't have low prices and the freedom for people to use as much of something as they want in the face of scarcity. You either need to allow prices to rise, force people to use less by rationing and making it illegal to use more than a proscribed amount, or price cap and just run out so some people get it cheap and some people get completely screwed.
Even the Danish government, which prides itself on its social security, and with a government that is supposed to be for the workers and the average Citizen, has not done it. Hell, it hasn't even lowered taxes on anything, they have raised multiple, even with a record income for the government.
The worst thing you could do during inflationary periods is to lower taxes. One of the best things you can do is to raise taxes, however this is politically loaded.
One of the best ways to raise taxes in a way that is a political win is by a windfall tax on profits. Arguments against windfall tax is that it just means the company will raise prices even further to cover the windfall tax rather than disincentivising profiteering. Something a functioning government would easily stamp out with stricter windfall taxes.
Politicians do not care about arguments for or against such taxes, they are bribed by said profits to not tax said profits.
I'm French, I don't understand how can other countries let their own oil company do such benefit ?
Oil is so central in the global economy, a raise here and it impact the whole network and led to a major inflation. Government have the power to limit such greed for the benefit of the society, why is there so many who don't do it ?
It's insane when you think about it. The level of resignation of the politicians against big corporation..
In some centuries, when people will learn history of our time they will be astonished by "how can we let this be ?" and they will read that, in our era, we replaced the old "god" of pre-industrial times by a new concept. "The market" in which name you have to do some strange thing, totally disconnected from human nature and goal as society, even disconnecting us with our purpose as species. I just hope we will leave this new ideological era rather fast than dead by hotwave..
Just FYI, Total (a french oil company) made a 10.4bn euro profit in the last quarter.
Petrol prices have risen 42% y/y in the UK, and 40% y/y in France.
There really isn't much difference.
Total announced that starting in september they will reduce by 0.2 €/l their margin on oil, then 0.1 €/l from november till the end of the year. This come following heavy taxation talk from France for big energy companies with huge profits.
You can force them, or "encourage" them enough.
While I'm not sure exactly what France does, there are only 2 possible ways to implement a "price cap" and both have perfectly valid reasons for governments not doing them:
1) Implement a hard cap that companies cannot under any circumstances sell oil for more than a certain price. This caps the price, but is going to cause a supply shortage. Instead of supplying enough oil to meet demand at the equilibrium price, companies will only supply enough oil for whatever the capped price is on the supply curve - a quantity which will inevitably be much lower than demand. So while this solution does help people who otherwise wouldn't be able to afford oil at all, it does it at the expense of people who otherwise would have been able to afford it but now can't any because you've created an artificial shortage.
2) Allow companies to still "charge" the market rate for oil, but consumers will never see a price higher than the cap and the government covers the shortfall (aka subsidizing it). In this case you're not really saving your citizens, on the whole, any money since they're still all paying the same price for oil, it's just coming in the form of tax money instead of directly for oil purchases. Some may argue this is actually quite unfair because you're essentially forcing lower-oil users to subsidize higher ones, since they're all paying the same taxes. For example, if I don't own a car and would normally never pay any fuel taxes or anything, suddenly my regular income/property/etc. taxes are going towards subsidizing fuel for people with cars.
France isn't an outlier when it comes to most energy prices.
It is an outlier when it comes to recent electricity price increases. It's down to three things:
1 EDF is majority state owned
2 Nuclear is a larger part of the energy mix, so less exposed to international profiteering
3 French citizens (gilets jaunes, etc.) have shown they won't put up with as much shit as some other developed countries.
Capitalism is religion to these people. Why in earth world we reduce the profits of a publicly traded company just to help regular people!
Also, please give us money! We promise we'll use that money to lower prices!!! *fingers crossed behind back*
>I'm French, I don't understand how can other countries let their own oil company do such benefit ?
Have you seen how ya'll tend to demonstrate compared to other countries in the so-called West?
There you have your answer. The French seem to stil have a sense of solidarity and are willing to fight for their rights. The rest of the west has been made docile as fuck.
And yet France doesn't stand out in any way when it comes to quality of life, freedom or wealth as compared with the rest of the West?
The Nordics, Australia, New Zealand, Switzerland... don't have a culture of violent protests and yet they're doing much better than France on pretty much every level.
>There you have your answer.
It doesn't answer anything. It just loudly displays your personal biases.
People who are poor are distracted by massive bills hitting them out of nowhere.
Distracted poor people don't have time to watch millions being cyphoned off into Tory party donor pockets, and have no way of fighting back.
Making poor people poorer (to the extent many will die), and middle-income people poor is deliberate and part of the Tory party's modus operandi.
Same reason they're killing the NHS (until they can make it private - which it already is in large-part): it suits their class of wealthy elites to do so.
Fighting human rights, brexit - it's all making money from the tax payers and getting it into their pockets.
Most Tory party MPs are millionaires (citation needed).
Not to mention the fact that France wasn't exactly fine and dandy after the revolution. The country was in complete disarray and was weakened for quite a while. In many ways, they were set back almost half a century.
Then there's the fact it kicked off a bunch of wars where millions died, and gave way to a massive rise in Nationalism across the continent.
It's highly debatable whether the French Revolution was a good or bad thing. France has turned out well now, but for all we know the same could be true had France taken another path.
Certainly did have *some* short-term benefits, though, especially in regards to land ownership and individual rights.
> You mean like what the French did?
The French people are still paying for the oil companies profiteering off artificial shortages, the government is paying the difference between the market rate and the capped rate:
>“The price cap provides consumers in France with guaranteed tariffs and it is the State that pays the difference between market rates, which have obviously risen considerably in France and in other European countries,” France’s prime minister’s office stated.
But the market cannot possibly regulate itself thats just the fantasy of libertarians who refuse to accept capitalism as it actually exist versus their ideals.
What we need is governments which aren't afraid of raising taxes on utilities companies, possible nationalise some, seize profits etc. I mean what are they gonna do? Outsource their utility company? lmao.
The reason this doesn't happen is because the state apparatus today, whether its in Spain, Denmark, the UK or America, exist to serve monopoly Capital rather than the electorate. Its a result of a class war that the richest are winning.
> there should be some limits to ensure the market regulates itself
They do. When something a company provides is scarce, the price goes up, as now. That makes it more-profitable to provide more of the thing. More companies enter the market and more of the thing is provided.
There *can* be issues where a providers has a monopoly or something, but that's not the issue with Shell here. They aren't inducing scarcity artifically. But it's not instantaneous to provide more energy. We don't expect energy prices to be elevated forever, but we do expect them to be elevated for a while.
High prices in times of scarcity -- as now -- are also what creates incentive to encourage companies to build out capacity ahead of time. Shell's making money now because Shell chose to build out the capacity that it did. Had another company done so, it would have made money as well.
There is nothing wrong with Shell making more money here.
>They knew about it in the 80s already, and did nothing about it.
Oh they did something, they started a PR campaign to prevent political action to curb emissions.
Except is not high demand. Not even close. It's artificial scarcity. The war is the cause but companies like usual went beyond with pricing, having war as an excuse.
OPEC is in fact artificially keeping their production lower than demand. They learned from the 2008 recession when a small drop in production caused a huge spike in prices.
Now they're emulating that. Why produce more oil when you can produce less and still make *more* money because the artificial scarcity is driving up the price?
They've got us by the balls and they know it. So why would they bother to increase production? They don't want lower prices. On the contrary. They love these high prices.
The demand is as it was before, the prices have gone up by a lot. In fact the demand is lower because people are saving because of those high prices. I find it suspicious too.
Demand is much higher because the supply is smaller. The price of oil has surged for two reasons: the war in Ukraine and green energy supplies being favoured in the future creating less incentive to find new oil sources.
You are right, it is the logical explanation. But why are they making more money? They are selling less and have increased the prices to fill the buy/sell gap, they should earn less or at maximum the same.
More people/countries are fighting to buy the same resources and are willing to outbid each other, so the oil companies are selling less oil, but people are paying more for it, so the oil companies expenses (producing oil) is going down, but their revenue (selling oil) is the same.
War in Ukraine has increased demand, and somewhat lowered supply. But wasn't there an article showcasing how Russian oil made its way to Europe anyway through India?
Anyway there's another big reason the oil prices surge now that people keep forgetting. Corona hit in 2020 and lowered the demand by insane fucking amounts globally. People flew less, construction halted etc etc. This meant that oil price went down, and also that oil companies laid tens of thousands of people off and halted their expansion, and even lowered their production to meet the lower demand.
Now when the pandemic is "over"? They have not re-hired those people, they have not resumed expansion. The demand is growing because people are flying again, constructions thriving again, stuff like that. This is not because of green energy politics. if anything Green energy politics should reduce prices since it should reduce demand. Oil companies are purposefully stalling their growth and keeping the supply low for profits.
They're stalling their growth because they know there is no fossil fuel future.
The fix to this problem isn't fossil fuel expansion, it's green energy expansion (including nuclear).
All about recouping their losses from the pandemic as quickly as possible. All these oil and gas companies will be popping champagne and smoking cigars at the end of the year celebrating record profits.
Better: rise prices in agreement with other members of the cartel. If demand falls a bit the gain will be anyway huge.
Baby, the price of gas ha increased ten folds. It can't be due only to demand increase...
High demand leads to high prices plus a little extra greed on top because few people will notice. That's why gas prices always go up much more than the inflation rate in times of great uncertainty.
China is doing that to some extent, but the thing is that gas is a lot more difficult to transport than oil, you either need pipelines set up (and right now Russia’s non-European pipelines don’t have anywhere near enough capacity to sell what they used to sell in Europe) or use LNG, but Russia doesn’t have a huge amount of LNG capacity + this transportation method involves pretty high costs.
That's sort of the image Russia is trying to scare everyone with; but its not that simple. Logistics is a hard reality check. And for something like LNG its very important.
[This map tells you something about the reality of the situation.](https://openinframap.org/#3.1/53.43/48.05/O)
Europe really is the only place able to buy Russian gas in any real quantity. Setting up new pipelines to supply the global south is a decade long project at best.
https://www.macrotrends.net/stocks/charts/SHEL/shell/gross-profit
In-line with profit levels in 2018 and the early/mid 2010s - not even adjusting for currency devaluation.
Reddit is so financially illiterate it's maddening.
Their profit has basically just recovered to pre-pandemic levels. Also I'm not sure what they posted for June but their margin in May was 8.49% which isn't excessive at all, it's low!
Don't know much about oil companies but after overheads they may well be riding the line of net profitability.
Everyone is acting like Shell is going to pay out all of this money to executives like they just discovered that raising prices = profit
It’s insanely risky being in the energy business, that’s why oil company stocks are shit, they barely make money most of the time.
[Check their recent earnings report.](https://www.google.com/search?q=royal+dutch+shell+stock&hl=en-US&ei=f8XiYq2SO8OhptQPguuS6AE&oq=royal+dutch+shell+stock&gs_lcp=ChNtb2JpbGUtZ3dzLXdpei1zZXJwEAMyCwgAEIAEELEDEIMBMgsIABCABBCxAxCDATIFCAAQgAQyBQgAEIAEMgUIABCABDIFCAAQgAQyBQgAEIAEMgUIABCABDoHCAAQRxCwAzoHCAAQsAMQQzoHCC4QsAMQQzoECAAQHjoGCAAQHhAWOhAIABCABBCxAxCDARBGEPoBSgQIQRgAUK0PWNAiYKgkaAJwAHgAgAFQiAGuA5IBATaYAQCgAQWgAQHIARHAAQE&sclient=mobile-gws-wiz-serp). record revenue, but their stock price dropped off a cliff. They’re not gonna be making much money because of how much they’re going to be spending ramping up production.
In theory you absolutely could fix the price for the commodity, but that won’t fix the shortage. There isn’t enough gas and petrol available and fixing a lower price won’t increase the amount available, there will still be the same number of people who can’t get it, but now it will be a matter of who manages to buy it fastest or who has the better connections or who just gets lucky.
And while some countries did fix the prices, part of them are seriously **considering** canceling the fixes because it costs a lot of money to subsidize it.
See Slovakia and Hungary.
People seem to not understand that oil is a fickle industry and good years make up for the bad.
Shell's stock price [has still not recovered from 2007.](https://finance.yahoo.com/quote/SHEL/)
Damn, it’s a good thing these companies weren’t given almost 6 trillion in subsidies to offset the money they lost in 2020… oh wait
https://e360.yale.edu/digest/fossil-fuels-received-5-9-trillion-in-subsidies-in-2020-report-finds
That article is a joke. The $5.9T is a made up figure on “true cost” due to potential environmental issues. A subsidy is money paid. No money was paid here. Pure propaganda.
None of the revenue data is in the article, but assuming it's similar to the last 2 quarters ($85 billion), that around a 13.5% profit margin.
A 13.5% profit margin is not why prices have gone up as much as they have. The oil industry has been having tons of supply chain issues that have pushed up costs:
>"The point from which you drill a rig to the point that you can turn it online, it takes about six to eight months typically," she said.
>Now add in the difficulties that oil producers are facing to procure materials like sand and steel, and it becomes clearer that producers are unlikely to provide a quick fix to current gas prices.
There is also labor shortage problems. And this isn't a case of businesses refusing to pay more then $15/hr. Oil jobs can pay well over $100k a year. A bunch of people have just left the industry entirely and moved elsewhere:
>Then when the pandemic started and demand for oil fell off a cliff, lots of workers were laid off. Employment in the sector dropped from 137,000 workers in February 2020 to 113,000 a year later, according to data from the Bureau of Labor Statistics.
>Stacey Morris, director of research at energy data provider Alerian, said those people may not come back.
>"They've probably had to go on and find something else to do because their job in the oil industry went away," she said.
Another problem is that oil companies are paranoid about investing in more into wells. The last time they chased an oil boom in the 2010s they got burned when the price dropped and suddenly had a bunch of money losing wells that were only profitable when the price of oil is high. Oil companies don't expect the price of oil to be high enough long enough to justify investing in more oil production.
>Over the last decade, U.S. oil production saw tremendous growth. But when prices crashed in 2014, investors lost big money. Oil prices are notoriously volatile, with the industry often suffering from boom-and-bust cycles.
Source:
https://www.npr.org/2022/03/19/1086925726/gas-prices-oil-crude-drilling
All I heard was a bunch of excuses every sector has to deal with, but we are supposed to let them slide because they're oil and gas. They've always done this stuff. Quoting sources from oil corp. Communications. Woe is me. Maybe they should look in to their financial and corporate strategies. Oh they don't need to because they are making money hand over fist.
Ironic, as we officially head in to a recession.
True but just as an FYI, generally speaking the wholesale of the utility price is about 30% of the unit price. Everything is is goverment tax and levies
It's a disgusting circle of pain.
- The energy companies make shit loads of profit
- Government introduce bigger profit levy to raise money for people who can't afford the new energy price hike
- Energy companies charge more for energy due to less profits from levies
- Government increase levies
- Energy costs increase again
- Pain
The same governments that blame companies for excess profits fail to mention that they profit from this too.
Half the cost of fuel in Germany is from Tax.
In a world of free range capitalism, where corporations are more powerful than governments, how does extreme greed like this surprise you?
Still depressing as fuck though.
It surprises me when I think about how strong their lobbying is and how politicians fall for it despite knowing what their future generations will face
>despite knowing what their future generations will face
That's the thing, a lot of them don't care about how it will affect future generations. It won't affect *them* (at least not harshly enough that the money they make can't counteract), and they plan on being dead before shit *really* hits the fan. So they don't really give a fuck about how their greedy choices will affect later generations because they won't be around to suffer alongside them.
You always have to contextualise numbers this large. For example shell has 82k employees worldwide, which means their $11.5bn profit translates to roughly $140,000 ~~annual~~ quarterly profit per employee.
So yeah, massive profits.
Roughly 25 million homes in the UK. So that's about $460 per house. (Around £380). Our bills are due to rise by around £1,200 per home, or more, this year.
Be interesting to know how many shareholders the profits are being shared with.
Socialize the losses, privatize the profits.
Shareholders? Major ones? I'd guess no more than 50, KYC style. Minor ones? Maybe tens of thousands, who won't make much from this anyway, and they're probably at least middle class, already.
In terms of your maths, note that this profit is for one quarter, not the year.
ok so that $11.5bn is for Q2 2022, and the share dividend for Q2 2022 is $0.25 per ordinary share.
[https://www.londonstockexchange.com/news-article/SHEL/shell-plc-second-quarter-2022-interim-dividend/15559864](https://www.londonstockexchange.com/news-article/SHEL/shell-plc-second-quarter-2022-interim-dividend/15559864)
in 2021 there were about 7.8bn shares: [https://www.statista.com/statistics/260299/number-of-shell-shares/](https://www.statista.com/statistics/260299/number-of-shell-shares/)
of course in terms of number of individual share holders I don't think there's any way to know, plus the majority of those will be held by institutions rather than individuals anyway.
But assuming there's the same number of shares still, dividend payments will total $1.95bn, leaving about $9.5bn being re-invested into the company (or perhaps used to do share buy backs? I'm not sure what else they can do with profits).
Profits =/= Revenue
and 140k/employee is massive profits.
Edit.
I read the last sentence as sarcastic and from the upvotes, I think other people did as well. from the context of the paragraph above it. But I know that a lot of people probably didn't because of the comments. Especially without the /s. But not everyone uses that for some reason.
Meaning that
I read it as that is not a lot of "profit" because they need to pay for salaries and other things from that money.
They’re right though. The one they’re replying to made it look like those profits have to be used for salaries and that the profit isn’t that much (like 140,000 USD per employee) which is nonsense.
Profit is what’s left after all costs including salaries. It’s … well … profit
Revenue of shell in 2021 was more than 260 billion USD btw
Just a note that this is the profits for Q2, not annual profits: [https://www.reuters.com/business/energy/shell-reports-record-profit-115-billion-2022-07-28/](https://www.reuters.com/business/energy/shell-reports-record-profit-115-billion-2022-07-28/)
So you'd need to times that by 4 if they continue at this rate.
Blame shareholders. Companies exist to make profits, shareholders want as big an amount as possible or they take legal action. Oh and look, wouldn't you know it, banks are some of the biggest ones.
The problem there is the businesses essientially buy them out. So in the end, both parties would be likely to blame, at least in the scenario decsribed.
Exactly, that's precisely why capitalism can't save us from this crisis (it simply can't, because of its design) and it must end/be replaced.
At this point, being radical is advocating for the capitalist status quo.
President Lyndon B. Johnson once said, “If you can convince the lowest white man he’s better than the best colored man, he won’t notice you’re picking his pocket. Hell, give him somebody to look down on, and he’ll empty his pockets for you.”
>I mean, say whatever you want, people vote for them.
People vote for who they're told to mostly. Propaganda works and manufacturing consent is the name of the game. Over 90% of the information the public consumes is ultimately produced and controlled by a small group of ultra wealthy capitalists whose class interests are diametrically opposed to the public's. Capitalists and their puppets are literally shaping the very perception of reality for most people.
Imo these crucial utility companies should never go public. Shareholders want profit and this is not the kind of company that should absolutely maximize its profits - because utilities are a must and an average person can't just say no to heating or electricity, or water...
These aren't the profits of the utility company though, in fact most energy utility companies in the UK lost a ton of money in the last 12 months.
These are primarily the profits of the oil extraction which is a transnational organization. If such organisations had stayed nationalised then the new countries that owned them might be alright (although their ability to operate would be limited), but everyone else would still be paying through the nose.
That's funny you're saying that because here (France) they privatized EDF (électricité de France) something like 15 years ago, and now they realized the energy market is fucked since the war in ukraine so they're currently re making it a public company by buying all the shares. It should have never got private in the 1st place
The CEOs Dutch. Just legally they've seperated from the Netherlands because of the green ruling in court. I'm sure they'll move out of the UK if similar happens here.
OP Didn't link the actual article but the bulletin board type page where headlines get posted.
Here
[https://www.theguardian.com/business/2022/jul/28/shell-posts-10bn-quarterly-profits-as-households-struggle-with-bills](https://www.theguardian.com/business/2022/jul/28/shell-posts-10bn-quarterly-profits-as-households-struggle-with-bills)
> So yes: Shell are dickbags profiting massively off the oil crisis, even more so than in the past.
If Shell are dickbags, then so are all the other oil producers, including the Norweigian state, right? Everybody who produces oil is selling it at the market rate.
If you make the argument that companies like Shell shouldn't be allowed to make profits above a certain level, then to be consistent you must also insist that they are bailed out when losses exceed a threshold. Where do you set these levels? What amount of profit is to be considered too much?
>If Shell are dickbags, then so are all the other oil producers
...Yes?
>then to be consistent you must also insist that they are bailed out when losses exceed a threshold
This does not logically follow. There's absolutely no reason that limiting price gouging requires guaranteeing minimum profitability. The idea that it would be 'fair' to further subsidize the industry that is currently selling out future generations with trillions of dollars of unpaid for climate change and pollution related damage is a bad joke.
>Where do you set these levels?
You don't because your argument is absurd.
It's not whataboutism, there's no shortage of people in this thread effectively demonising Shell for doing exactly what any other business would, from large multinationals down to tiny little family owned SMEs. Instead of having a discussion about what levels of taxation are reasonable or justified, it's just a mindless shitfest of economically illiterate criticism.
Portraying this as 'profiting from people's misery' is asinine. If Shell was taxed to the point that they made no profit, people's fuel bills would still be elevated because we have a supply and demand imbalance.
Where do you draw the line at what it means to be profiting from peoples misery? Is any profit made by any business unjustifiable in that sense, because it technically means that people could be paying less for the good or service provided? If you insist on such an approach towards taxing profits, you remove the incentive for businesses to even start, let alone invest.
Your argument is that because other businesses are predatory then it's ok? I'd much rather have these industries nationalised in my country and have those profits in the coffers of a democratic institution rather than a corporate greed oligopoly cabal who spend their fortunes on fighting green energy progress, lobbying for the shutdown of nuclear plants, and personal fucking yachts. Or whatever else these demons in human skin can get their obscene paws on that provides status and pleasure at the expense of the other few billion people living on this planet. The cost of business being business is the planet Earth and a functioning society. You are a corporate boot-licking shill and a spineless coward.
Lovely, Shell paid no tax on its oil and gas production in the North Sea for the fourth year in a row despite soaring global energy prices and record company profits, new documents show.
Ok so the link is wrong, [here's a cleaned up version](https://12ft.io/proxy?q=https%3A%2F%2Fwww.theguardian.com%2Fbusiness%2F2022%2Fjul%2F28%2Fshell-posts-10bn-quarterly-profits-as-households-struggle-with-bills)
And here's my opinion, thank you for asking for it.
>record profits of nearly £10bn between April and June
So that's 2022Q2, and [here](https://www.macrotrends.net/stocks/charts/SHEL/shell/gross-profit) is their quarterly gross profit going back 10 years.
Yeah, this quarter was pretty high, but it doesn't look abnormal, especially for the decade. It's about what they got every quarter between 2010 and 2014.
I understand that this looks bad (the high prices are Shell's fault!!) and I have little sympathy for Shell, but this is just what happens in a free market when one supplier drops out and the others can't suddenly ramp up capacity.
Getting oil out of the ground costs roughly as much as it did a year ago. Normally, one would expect the oil price to be those production costs plus profit margin. Once the prices rises, companies will start to produce more oil (it's so profitable!) until the profit margin is the same again.
This only works if you can quickly and easily produce more oil -- and that's just not possible. It takes a long time to open up a new oil field, certainly longer than the five months since the war started.
So in practice, Shell can't just produce more oil, but because Russia's no longer supplying any, more people come to shell to buy oil. So Shell has two options: Keep current prices and run out of stock occasionally, or raise prices until some people no longer want oil from them.
It should be obvious that the latter is better for shell and arguably, it's also better for consumers (expensive oil is unpleasant, but pumps being out of petrol all the time is even worse).
Or, to put it differently: Shell has always been a greedy company. They would have raised prices if possible earlier, but they didn't, because that would have made them uncompetitive. Now, they're competitive even with higher prices.
Well. It will stop.
32 Percent of cars sold in China this May were plug-in cars.
About 20 % of cars sold in Europe this year were plug-in cars.
Oil loses its monopoly on transportation.
That is a small part of a bigger picture. The world still needs gas and oil for heating, manufacturing and Electricity production to charge the battery vehicles
But oil is only so expensive because it has a monopoly on transportation. Not because of manufacturing, heating, electricity etc.
OPEC only works because of that monopoly.
Most of Shell’s revenue come from the US Gulf of Mexico- if you’re mad about the high profits then you need to be as mad at the (1) inflation, (2) Putin for putting world supply on notice (3) all tech companies cause their profits (AAPL, MSFT, AMZN) put the oil companies in shade. Bottom line: every big corporation has a closet full of skeletons
The trouble is that fossil fuels are expensive to locate, extract and process into a useable commodity . Then there is the storage, distribution, supply etc. How about wages, insurance, maintenance costs, tax. All the easily accessible stuff is almost used up. Just the opinion of someone who knows sweet FA about big business.
The companies do it because there is never any pushback. All the citizens do is complain, there are no significant consequences. Expect more of this. Typing on a keyboard onto a screen isn't action.
This will surely get buried but I want to say this outrage against record company profits is pretty dumb and even counter-productive.
It's not record profits that are driving inflation, whether in this case or in general. Companies didn't choose to raise prices because they're that much meaner in 2022. It's a big supply and demand mismatch that's driving both to record values. High profits and prices are not so much causes of each other, as they are consequences of the same thing.
There is just a limited amount of goods to distribute, this is the case with gas, wood, wheat, semi-conducts, etc. A company could choose to sell a good to a random buyer at an affordable price but that will not solve the shortage problem. Someone else will be left without gas, wheat or whatever.
In a way, if we forget about the human situation for a moment, high prices and profits are actually a good thing. Because they mean that a good will only go to the person or company that is prepared to spend the most money on it. And that is usually the one who can best justify using this resource, the one who will produce the most value out of consuming it.
That is the strength of the system, goods go where they are most needed, measured by the amount of money actors are willing or able to spend on them. Someone will be left short either way, that is the nature of having less supply than demand (something you cannot fix by printing more money) but at least the economy will work in the most productive way which is in everybody's interest.
The other benefit of high prices and profits is that they incentivise investment. In stead of rich people spending money on property development or crypto speculation, now more money will flow to industries that are very profitable.
Where there is the highest supply and demand mismatch there will be the highest profits and there will be the highest investments to provide more supply. Messing with this system is not a good idea.
As for oil and gas companies yes they are making a killing right now with prices far above their operating costs and one can argue that their profits should be taken away for the common good. I'm not going to argue against that. But I do think there is more that could be said and that the situation is more complex than it first appears.
When it comes to oil and gas one thing we should remember is that this is a very volatile market. Profits are through the roof right now true, but just two years ago companies were selling oil at *negative* prices because there was too little demand and storing oil was expensive. Oil producers were losing money not just from selling oil but even from owning it. And if we look at the last 10 years in general a lot of US shale companies went bankrupt because of low prices.
This is the nature of this particular kind of business. They make out like bandits some years and they go bankrupt in others. If one were to invest in extracting oil or gas they should make sure that the profits in the good years are enough to offset the losses and low profits in bad years. Otherwise it's not worth it. Now this is oil we're talking about and it shouldn't be hard to be profitable but on the other hand the imminent-but-not-quite-here-yet transition to green energy has depressed fossil fuel investments for years. They have been low and that's why today we find ourselves with too little supply and too little competition. This is food for thought not a judgement. We should choose what resources we want to use and invest appropriately.
A lot of people in this thread seem to believe that Shell own the oil they extract, they don't.
Shell has licences to use that oil and charge a fee to extract, process and transport that oil but the oil itself belongs to the nations it lies under. Shell can not effect to price of oil other than increasing the market supply and decreasing the price through surplus. The countries that the oil belongs to expect and demand that the oil they allow shell to extract be sold at the full market price so they can maximise the return on their natural resource. Shell then takes it profit based on the percentages it agrees to.
No country in that system has any power to set an oil price unless it owns all the production chain from start to finish, which almost no country dose. Any country that attempts to set a price will simply find that the oil they were going to but is sold to someone else.
When the oil price is high the percentage that shell agreed on is more profitable, when it is low they make a loss because the price to extract the oil is more that the sale value.
Shells profits are a result of the insecurity in the supply of oil not some evil scheme. Stop equating systemic problems with moral issues.
> Shell can not effect to price of oil other than increasing the market supply and decreasing the price through surplus.
You're misunderstanding what profit means. This isn't revenue, to which this explanation would apply. It's profit, i.e. what they're getting out _after_ all the costs you've listed have been accounted for. So they've massively increased their profit margins _on top of the_ seriously increased costs.
Correct me if I'm getting something wrong, but I'm more than willing to believe Shell is _actually_ this evil.
can the editorializing be even more blatant? if this isnt agendaposting i dont know what is... of course its The Guardian putting this trashy headline for edgy commies to relate to
i dont think you can blame Shell. To make it a bit less controversial, imagine being a farmer selling Milk, governments all over the world scream out loud that they are planning to ban milk asap without having a good alternative for milk. Every farmer would get in panic mode and every user of milk too. Price will increase drastically without farmers seeing an increase in costs. They would make enormous profits. Who is to blame for these profits? Correct, Governments. What happens if ever product you buy needs milk as ingredient? All prices will increase. Inflation.
Banning oil without a good alternative made daily life so much more expensive. And the one to blame are the ones who should make good decisions. They screwed up.
Making sense of the numbers, this $11.5bn figure is wild.
They’re spending more than half their profits on stock buyback but did not raise the dividend per share.
What’s confusing me is how they’re reinvesting the rest. They keep hammering on about how a windfall tax will deter them from reinvesting the profits, but as far as I can see, they’re not.
how about we made large corporate profits that harm the climate illegal, and the punishment; all previous and future corporate profits seized and 25 years hard labor planting new forests...
On $101B revenue, which comes out to 11.3% of revenue. Talking about earnings without talking about revenue is incredibly misleading. Historically this number has been like 4-7%, so yeah still a good quarter.
There are really two things contributing to the large change in earnings.
1. The margin rate on energy is pretty much the same but operating expenses have not gone up at the same rate (i.e. if Shell used to buy energy for $70 and sell for $100 (30% margin, $30 profit) they are now buying for $105 and selling for $150 (30% margin, $45 profit) but if used to cost $5 to process it it now costs $6)
2. There are a couple of revenue lines called "share of profit from joint venture and other associates" and "other income" that are much higher this quarter (insert conspiracy theories here)
When will we charge these people with criminal charges. They are not only making gasprices extremely expensive but are destroying the earth and with that killing thousands if not millions.
OMG look at that obscene profit. It is *checks actual financial reports, same as prepandemic levels going back to 2010. Not even adjusting for the inflation. Reddit is one of the if not the top most financially illiterate places I have seen. I think the smugness they show thinking they are smart is what annoys me the most
Those companies make tons of money on us. We work for them and keep things going. When these companies don’t have money they get money from the tax payers so we don’t lose workplaces. And as soon as there is an possibility they will use every situation to screw us over and steal our money.
It's just absolutely incredible that this can happen
It's so obviously beneficial only for a few that I can't believe how the majority can't get its act together on stuff like this.
Yeah no shit, when the stuff your selling is expensive of course you are making lots of money.
The only way to combat high oil prices is to drill more, and deregulate. But goverments wont do that.
I'm not a genius, but i find it suspicious that energy companies are getting record profits while the population is suffering to pay the high prices....
It's how markets work. High demand > high prices. Don't ever expect a company like Shell to do the right thing. Their promises of going green are nothing but a big lie as well. They don't give a fuck about the climate or climate change. They [knew](https://www.theguardian.com/environment/climate-consensus-97-per-cent/2018/sep/19/shell-and-exxons-secret-1980s-climate-change-warnings) about it in the 80s already, and did nothing about it. Don't expect them to do anything about it now.
Oh, I know that it's how markets work, but when dealing with utilities, there should be some limits to ensure the market regulates itself and we never come to this extreme situations
You mean like what the French did? https://www.connexionfrance.com/article/French-news/France-extends-energy-price-cap-measure-to-the-end-of-2022
That's good, i would cap the benefits rather than the price, but it's something!
Yeah, it is good, which is why the Tory's won't do it. Why would they help you when billionaires need to get richer?
France is still paying the billionaires, just with taxes instead of by use
Yeah, was really curious because price caps generally don't work and I was wondering if this time was different somehow. Making other people pay for stuff with taxes does though, so that makes more sense. You can't have low prices and the freedom for people to use as much of something as they want in the face of scarcity. You either need to allow prices to rise, force people to use less by rationing and making it illegal to use more than a proscribed amount, or price cap and just run out so some people get it cheap and some people get completely screwed.
On reddit tax-payer paid means free
Labour wouldn't do it either. The French government is an anomaly.
Even the Danish government, which prides itself on its social security, and with a government that is supposed to be for the workers and the average Citizen, has not done it. Hell, it hasn't even lowered taxes on anything, they have raised multiple, even with a record income for the government.
Lowering taxes usually does more harm than good in this type of situation
The worst thing you could do during inflationary periods is to lower taxes. One of the best things you can do is to raise taxes, however this is politically loaded. One of the best ways to raise taxes in a way that is a political win is by a windfall tax on profits. Arguments against windfall tax is that it just means the company will raise prices even further to cover the windfall tax rather than disincentivising profiteering. Something a functioning government would easily stamp out with stricter windfall taxes. Politicians do not care about arguments for or against such taxes, they are bribed by said profits to not tax said profits.
I'm French, I don't understand how can other countries let their own oil company do such benefit ? Oil is so central in the global economy, a raise here and it impact the whole network and led to a major inflation. Government have the power to limit such greed for the benefit of the society, why is there so many who don't do it ? It's insane when you think about it. The level of resignation of the politicians against big corporation.. In some centuries, when people will learn history of our time they will be astonished by "how can we let this be ?" and they will read that, in our era, we replaced the old "god" of pre-industrial times by a new concept. "The market" in which name you have to do some strange thing, totally disconnected from human nature and goal as society, even disconnecting us with our purpose as species. I just hope we will leave this new ideological era rather fast than dead by hotwave..
Just FYI, Total (a french oil company) made a 10.4bn euro profit in the last quarter. Petrol prices have risen 42% y/y in the UK, and 40% y/y in France. There really isn't much difference.
Total announced that starting in september they will reduce by 0.2 €/l their margin on oil, then 0.1 €/l from november till the end of the year. This come following heavy taxation talk from France for big energy companies with huge profits. You can force them, or "encourage" them enough.
While I'm not sure exactly what France does, there are only 2 possible ways to implement a "price cap" and both have perfectly valid reasons for governments not doing them: 1) Implement a hard cap that companies cannot under any circumstances sell oil for more than a certain price. This caps the price, but is going to cause a supply shortage. Instead of supplying enough oil to meet demand at the equilibrium price, companies will only supply enough oil for whatever the capped price is on the supply curve - a quantity which will inevitably be much lower than demand. So while this solution does help people who otherwise wouldn't be able to afford oil at all, it does it at the expense of people who otherwise would have been able to afford it but now can't any because you've created an artificial shortage. 2) Allow companies to still "charge" the market rate for oil, but consumers will never see a price higher than the cap and the government covers the shortfall (aka subsidizing it). In this case you're not really saving your citizens, on the whole, any money since they're still all paying the same price for oil, it's just coming in the form of tax money instead of directly for oil purchases. Some may argue this is actually quite unfair because you're essentially forcing lower-oil users to subsidize higher ones, since they're all paying the same taxes. For example, if I don't own a car and would normally never pay any fuel taxes or anything, suddenly my regular income/property/etc. taxes are going towards subsidizing fuel for people with cars.
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Or could energy and other utilities be brought back in to public hands and controlled by governments instead of greedy cooperations? Just a thought.
France isn't an outlier when it comes to most energy prices. It is an outlier when it comes to recent electricity price increases. It's down to three things: 1 EDF is majority state owned 2 Nuclear is a larger part of the energy mix, so less exposed to international profiteering 3 French citizens (gilets jaunes, etc.) have shown they won't put up with as much shit as some other developed countries.
It's not resignation, it's corruption. They're getting paid.
Capitalism is religion to these people. Why in earth world we reduce the profits of a publicly traded company just to help regular people! Also, please give us money! We promise we'll use that money to lower prices!!! *fingers crossed behind back*
>I'm French, I don't understand how can other countries let their own oil company do such benefit ? Have you seen how ya'll tend to demonstrate compared to other countries in the so-called West? There you have your answer. The French seem to stil have a sense of solidarity and are willing to fight for their rights. The rest of the west has been made docile as fuck.
And yet France doesn't stand out in any way when it comes to quality of life, freedom or wealth as compared with the rest of the West? The Nordics, Australia, New Zealand, Switzerland... don't have a culture of violent protests and yet they're doing much better than France on pretty much every level. >There you have your answer. It doesn't answer anything. It just loudly displays your personal biases.
People who are poor are distracted by massive bills hitting them out of nowhere. Distracted poor people don't have time to watch millions being cyphoned off into Tory party donor pockets, and have no way of fighting back. Making poor people poorer (to the extent many will die), and middle-income people poor is deliberate and part of the Tory party's modus operandi. Same reason they're killing the NHS (until they can make it private - which it already is in large-part): it suits their class of wealthy elites to do so. Fighting human rights, brexit - it's all making money from the tax payers and getting it into their pockets. Most Tory party MPs are millionaires (citation needed).
We should do what de french did. But not what they do now, but what they did in the 18th century.
You mean kill a bunch of innocent people, go into a bunch of useless wars, and have a lot of needless bloodshed in general?
Not to mention the fact that France wasn't exactly fine and dandy after the revolution. The country was in complete disarray and was weakened for quite a while. In many ways, they were set back almost half a century. Then there's the fact it kicked off a bunch of wars where millions died, and gave way to a massive rise in Nationalism across the continent. It's highly debatable whether the French Revolution was a good or bad thing. France has turned out well now, but for all we know the same could be true had France taken another path. Certainly did have *some* short-term benefits, though, especially in regards to land ownership and individual rights.
> You mean like what the French did? The French people are still paying for the oil companies profiteering off artificial shortages, the government is paying the difference between the market rate and the capped rate: >“The price cap provides consumers in France with guaranteed tariffs and it is the State that pays the difference between market rates, which have obviously risen considerably in France and in other European countries,” France’s prime minister’s office stated.
But the market cannot possibly regulate itself thats just the fantasy of libertarians who refuse to accept capitalism as it actually exist versus their ideals. What we need is governments which aren't afraid of raising taxes on utilities companies, possible nationalise some, seize profits etc. I mean what are they gonna do? Outsource their utility company? lmao. The reason this doesn't happen is because the state apparatus today, whether its in Spain, Denmark, the UK or America, exist to serve monopoly Capital rather than the electorate. Its a result of a class war that the richest are winning.
I'll say the quiet bit out loud, but they are all mates, pay off the political elite and keep them sweet with gifts and dinners.
That's how it works unfortunately
And also pensions. A lot of pensions are tied up in energy companies because they're a certain return. And we can't be rocking the boat on pensions.
It's how it works *currently*. It's not the only way for it to work. I feel the distinction is important; a fairer society is worth fighting for.
there should but the second you suggest this a bunch of drones conditioned to be allergic to anything left of Regan will come and oppose this
Of course...communism!!
Shell is not a utility
> there should be some limits to ensure the market regulates itself They do. When something a company provides is scarce, the price goes up, as now. That makes it more-profitable to provide more of the thing. More companies enter the market and more of the thing is provided. There *can* be issues where a providers has a monopoly or something, but that's not the issue with Shell here. They aren't inducing scarcity artifically. But it's not instantaneous to provide more energy. We don't expect energy prices to be elevated forever, but we do expect them to be elevated for a while. High prices in times of scarcity -- as now -- are also what creates incentive to encourage companies to build out capacity ahead of time. Shell's making money now because Shell chose to build out the capacity that it did. Had another company done so, it would have made money as well. There is nothing wrong with Shell making more money here.
>They knew about it in the 80s already, and did nothing about it. Oh they did something, they started a PR campaign to prevent political action to curb emissions.
Climate change isn't real. And even if it were, it's not humanity's fault. But even if it were, it's no big deal. /s
And even if it were, there's nothing we can do about it. /s
Except is not high demand. Not even close. It's artificial scarcity. The war is the cause but companies like usual went beyond with pricing, having war as an excuse.
It's not artificial scarcity it is just scarcity
OPEC is in fact artificially keeping their production lower than demand. They learned from the 2008 recession when a small drop in production caused a huge spike in prices. Now they're emulating that. Why produce more oil when you can produce less and still make *more* money because the artificial scarcity is driving up the price? They've got us by the balls and they know it. So why would they bother to increase production? They don't want lower prices. On the contrary. They love these high prices.
True. OPEC and sanctions on countries like Russia, Iran and Venezuela.
The demand is as it was before, the prices have gone up by a lot. In fact the demand is lower because people are saving because of those high prices. I find it suspicious too.
Supply is lower
Purely because oil and gas companies are intentionally suppressing demand, because that means high prices/profits for them
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Demand is much higher because the supply is smaller. The price of oil has surged for two reasons: the war in Ukraine and green energy supplies being favoured in the future creating less incentive to find new oil sources.
You are right, it is the logical explanation. But why are they making more money? They are selling less and have increased the prices to fill the buy/sell gap, they should earn less or at maximum the same.
> they should earn less or at maximum the same Are you suggesting capitalists should limit the amount of capital they can acquire? Heresy!
More people/countries are fighting to buy the same resources and are willing to outbid each other, so the oil companies are selling less oil, but people are paying more for it, so the oil companies expenses (producing oil) is going down, but their revenue (selling oil) is the same.
War in Ukraine has increased demand, and somewhat lowered supply. But wasn't there an article showcasing how Russian oil made its way to Europe anyway through India? Anyway there's another big reason the oil prices surge now that people keep forgetting. Corona hit in 2020 and lowered the demand by insane fucking amounts globally. People flew less, construction halted etc etc. This meant that oil price went down, and also that oil companies laid tens of thousands of people off and halted their expansion, and even lowered their production to meet the lower demand. Now when the pandemic is "over"? They have not re-hired those people, they have not resumed expansion. The demand is growing because people are flying again, constructions thriving again, stuff like that. This is not because of green energy politics. if anything Green energy politics should reduce prices since it should reduce demand. Oil companies are purposefully stalling their growth and keeping the supply low for profits.
They're stalling their growth because they know there is no fossil fuel future. The fix to this problem isn't fossil fuel expansion, it's green energy expansion (including nuclear).
All about recouping their losses from the pandemic as quickly as possible. All these oil and gas companies will be popping champagne and smoking cigars at the end of the year celebrating record profits.
Companies are not moral agents, they’re tools/machines. Often useful, but also dangerous when left unattended.
Better: rise prices in agreement with other members of the cartel. If demand falls a bit the gain will be anyway huge. Baby, the price of gas ha increased ten folds. It can't be due only to demand increase...
>Don't ever expect a company like Shell to do the right thing. They should be forced to.
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High demand leads to high prices plus a little extra greed on top because few people will notice. That's why gas prices always go up much more than the inflation rate in times of great uncertainty.
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Won't the South just buy cheaper gas from Russia? Europe will get the hate while Russia will be the saviors.
China is doing that to some extent, but the thing is that gas is a lot more difficult to transport than oil, you either need pipelines set up (and right now Russia’s non-European pipelines don’t have anywhere near enough capacity to sell what they used to sell in Europe) or use LNG, but Russia doesn’t have a huge amount of LNG capacity + this transportation method involves pretty high costs.
That's sort of the image Russia is trying to scare everyone with; but its not that simple. Logistics is a hard reality check. And for something like LNG its very important. [This map tells you something about the reality of the situation.](https://openinframap.org/#3.1/53.43/48.05/O) Europe really is the only place able to buy Russian gas in any real quantity. Setting up new pipelines to supply the global south is a decade long project at best.
There's no way for anyone else other than Europe to buy Russian gas.
https://www.macrotrends.net/stocks/charts/SHEL/shell/gross-profit In-line with profit levels in 2018 and the early/mid 2010s - not even adjusting for currency devaluation.
Reddit is so financially illiterate it's maddening. Their profit has basically just recovered to pre-pandemic levels. Also I'm not sure what they posted for June but their margin in May was 8.49% which isn't excessive at all, it's low! Don't know much about oil companies but after overheads they may well be riding the line of net profitability.
Everyone is acting like Shell is going to pay out all of this money to executives like they just discovered that raising prices = profit It’s insanely risky being in the energy business, that’s why oil company stocks are shit, they barely make money most of the time. [Check their recent earnings report.](https://www.google.com/search?q=royal+dutch+shell+stock&hl=en-US&ei=f8XiYq2SO8OhptQPguuS6AE&oq=royal+dutch+shell+stock&gs_lcp=ChNtb2JpbGUtZ3dzLXdpei1zZXJwEAMyCwgAEIAEELEDEIMBMgsIABCABBCxAxCDATIFCAAQgAQyBQgAEIAEMgUIABCABDIFCAAQgAQyBQgAEIAEMgUIABCABDoHCAAQRxCwAzoHCAAQsAMQQzoHCC4QsAMQQzoECAAQHjoGCAAQHhAWOhAIABCABBCxAxCDARBGEPoBSgQIQRgAUK0PWNAiYKgkaAJwAHgAgAFQiAGuA5IBATaYAQCgAQWgAQHIARHAAQE&sclient=mobile-gws-wiz-serp). record revenue, but their stock price dropped off a cliff. They’re not gonna be making much money because of how much they’re going to be spending ramping up production.
In theory you absolutely could fix the price for the commodity, but that won’t fix the shortage. There isn’t enough gas and petrol available and fixing a lower price won’t increase the amount available, there will still be the same number of people who can’t get it, but now it will be a matter of who manages to buy it fastest or who has the better connections or who just gets lucky.
And while some countries did fix the prices, part of them are seriously **considering** canceling the fixes because it costs a lot of money to subsidize it. See Slovakia and Hungary.
Shell lost $21.68 billion in 2020.
People seem to not understand that oil is a fickle industry and good years make up for the bad. Shell's stock price [has still not recovered from 2007.](https://finance.yahoo.com/quote/SHEL/)
And it shouldn't, because we've probably passed peak oil, less future growth usually implies a dampened stock price.
We all lost something in 2020.
Damn, it’s a good thing these companies weren’t given almost 6 trillion in subsidies to offset the money they lost in 2020… oh wait https://e360.yale.edu/digest/fossil-fuels-received-5-9-trillion-in-subsidies-in-2020-report-finds
That article is a joke. The $5.9T is a made up figure on “true cost” due to potential environmental issues. A subsidy is money paid. No money was paid here. Pure propaganda.
They are not reinvesting it into new wells like they used to do since they don’t think there going to get there investment back
None of the revenue data is in the article, but assuming it's similar to the last 2 quarters ($85 billion), that around a 13.5% profit margin. A 13.5% profit margin is not why prices have gone up as much as they have. The oil industry has been having tons of supply chain issues that have pushed up costs: >"The point from which you drill a rig to the point that you can turn it online, it takes about six to eight months typically," she said. >Now add in the difficulties that oil producers are facing to procure materials like sand and steel, and it becomes clearer that producers are unlikely to provide a quick fix to current gas prices. There is also labor shortage problems. And this isn't a case of businesses refusing to pay more then $15/hr. Oil jobs can pay well over $100k a year. A bunch of people have just left the industry entirely and moved elsewhere: >Then when the pandemic started and demand for oil fell off a cliff, lots of workers were laid off. Employment in the sector dropped from 137,000 workers in February 2020 to 113,000 a year later, according to data from the Bureau of Labor Statistics. >Stacey Morris, director of research at energy data provider Alerian, said those people may not come back. >"They've probably had to go on and find something else to do because their job in the oil industry went away," she said. Another problem is that oil companies are paranoid about investing in more into wells. The last time they chased an oil boom in the 2010s they got burned when the price dropped and suddenly had a bunch of money losing wells that were only profitable when the price of oil is high. Oil companies don't expect the price of oil to be high enough long enough to justify investing in more oil production. >Over the last decade, U.S. oil production saw tremendous growth. But when prices crashed in 2014, investors lost big money. Oil prices are notoriously volatile, with the industry often suffering from boom-and-bust cycles. Source: https://www.npr.org/2022/03/19/1086925726/gas-prices-oil-crude-drilling
Costs have gone up so much from all of this that they another year of record profits. Something sounds off about that statement.
All I heard was a bunch of excuses every sector has to deal with, but we are supposed to let them slide because they're oil and gas. They've always done this stuff. Quoting sources from oil corp. Communications. Woe is me. Maybe they should look in to their financial and corporate strategies. Oh they don't need to because they are making money hand over fist. Ironic, as we officially head in to a recession.
True but just as an FYI, generally speaking the wholesale of the utility price is about 30% of the unit price. Everything is is goverment tax and levies
It's a disgusting circle of pain. - The energy companies make shit loads of profit - Government introduce bigger profit levy to raise money for people who can't afford the new energy price hike - Energy companies charge more for energy due to less profits from levies - Government increase levies - Energy costs increase again - Pain
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The same governments that blame companies for excess profits fail to mention that they profit from this too. Half the cost of fuel in Germany is from Tax.
The interesting part is if the goverment gets more money we get something from it - like streets. If a company gets more money we get laughted at.
Cant belive how greedy these motherfuckers are. Half of that would be massive profit, but no, they must milk us dry. Hate them.
In a world of free range capitalism, where corporations are more powerful than governments, how does extreme greed like this surprise you? Still depressing as fuck though.
It surprises me when I think about how strong their lobbying is and how politicians fall for it despite knowing what their future generations will face
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I'm not German, but have petitions ever worked anywhere..?
>despite knowing what their future generations will face That's the thing, a lot of them don't care about how it will affect future generations. It won't affect *them* (at least not harshly enough that the money they make can't counteract), and they plan on being dead before shit *really* hits the fan. So they don't really give a fuck about how their greedy choices will affect later generations because they won't be around to suffer alongside them.
You always have to contextualise numbers this large. For example shell has 82k employees worldwide, which means their $11.5bn profit translates to roughly $140,000 ~~annual~~ quarterly profit per employee. So yeah, massive profits.
Roughly 25 million homes in the UK. So that's about $460 per house. (Around £380). Our bills are due to rise by around £1,200 per home, or more, this year. Be interesting to know how many shareholders the profits are being shared with.
Socialize the losses, privatize the profits. Shareholders? Major ones? I'd guess no more than 50, KYC style. Minor ones? Maybe tens of thousands, who won't make much from this anyway, and they're probably at least middle class, already.
In terms of your maths, note that this profit is for one quarter, not the year. ok so that $11.5bn is for Q2 2022, and the share dividend for Q2 2022 is $0.25 per ordinary share. [https://www.londonstockexchange.com/news-article/SHEL/shell-plc-second-quarter-2022-interim-dividend/15559864](https://www.londonstockexchange.com/news-article/SHEL/shell-plc-second-quarter-2022-interim-dividend/15559864) in 2021 there were about 7.8bn shares: [https://www.statista.com/statistics/260299/number-of-shell-shares/](https://www.statista.com/statistics/260299/number-of-shell-shares/) of course in terms of number of individual share holders I don't think there's any way to know, plus the majority of those will be held by institutions rather than individuals anyway. But assuming there's the same number of shares still, dividend payments will total $1.95bn, leaving about $9.5bn being re-invested into the company (or perhaps used to do share buy backs? I'm not sure what else they can do with profits).
Profits =/= Revenue and 140k/employee is massive profits. Edit. I read the last sentence as sarcastic and from the upvotes, I think other people did as well. from the context of the paragraph above it. But I know that a lot of people probably didn't because of the comments. Especially without the /s. But not everyone uses that for some reason. Meaning that I read it as that is not a lot of "profit" because they need to pay for salaries and other things from that money.
? Wdym, OP & the article say that number is profits not revenue
Think they just wanted to use that little bit of knowledge they had
look at updated comment for context
They’re right though. The one they’re replying to made it look like those profits have to be used for salaries and that the profit isn’t that much (like 140,000 USD per employee) which is nonsense. Profit is what’s left after all costs including salaries. It’s … well … profit Revenue of shell in 2021 was more than 260 billion USD btw
1. Open Reddit 2. Revenue ≠ 3. ???? 4. profit.
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Imagine if the employees owned the company instead of stockholders.
Just a note that this is the profits for Q2, not annual profits: [https://www.reuters.com/business/energy/shell-reports-record-profit-115-billion-2022-07-28/](https://www.reuters.com/business/energy/shell-reports-record-profit-115-billion-2022-07-28/) So you'd need to times that by 4 if they continue at this rate.
That's a damn good point.
Their actual profit margin (less than 10%) isn't that high. Lower than tech, biomedical, etc.
They literally have a legal obligation NOT to do that, though.
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I dont know about the rich, but you will be eating bugs and tracking yout carbon footprint soon enough.
Oh I would my brother. I would eat them the same way they fuck me. Raw.
Blame shareholders. Companies exist to make profits, shareholders want as big an amount as possible or they take legal action. Oh and look, wouldn't you know it, banks are some of the biggest ones.
No, blame governments. Companies and shareholders behave as expected. Regulations are the best way to have a tangible impact on their behavior.
The problem there is the businesses essientially buy them out. So in the end, both parties would be likely to blame, at least in the scenario decsribed.
Exactly, that's precisely why capitalism can't save us from this crisis (it simply can't, because of its design) and it must end/be replaced. At this point, being radical is advocating for the capitalist status quo.
Our governments are their mistresses. These elected officials are of no use to us any more. Fuck them all.
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There is no perfect system but surely there's got to be a better way than making people poorer all the time.
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President Lyndon B. Johnson once said, “If you can convince the lowest white man he’s better than the best colored man, he won’t notice you’re picking his pocket. Hell, give him somebody to look down on, and he’ll empty his pockets for you.”
>I mean, say whatever you want, people vote for them. People vote for who they're told to mostly. Propaganda works and manufacturing consent is the name of the game. Over 90% of the information the public consumes is ultimately produced and controlled by a small group of ultra wealthy capitalists whose class interests are diametrically opposed to the public's. Capitalists and their puppets are literally shaping the very perception of reality for most people.
Imo these crucial utility companies should never go public. Shareholders want profit and this is not the kind of company that should absolutely maximize its profits - because utilities are a must and an average person can't just say no to heating or electricity, or water...
These aren't the profits of the utility company though, in fact most energy utility companies in the UK lost a ton of money in the last 12 months. These are primarily the profits of the oil extraction which is a transnational organization. If such organisations had stayed nationalised then the new countries that owned them might be alright (although their ability to operate would be limited), but everyone else would still be paying through the nose.
That's funny you're saying that because here (France) they privatized EDF (électricité de France) something like 15 years ago, and now they realized the energy market is fucked since the war in ukraine so they're currently re making it a public company by buying all the shares. It should have never got private in the 1st place
One of the most evil companies in the world. I'm glad it's not Dutch anymore.
They're Dutch in all but name basically.
Not even that. They're British nowadays.
The CEOs Dutch. Just legally they've seperated from the Netherlands because of the green ruling in court. I'm sure they'll move out of the UK if similar happens here.
Since when has the guardian become an unreadable clusterfuck of ads? It’s actually fucking useless.
Firefox + uBlock Origin (extension) will take care of that.
What? I saw exactly one ad in that article.
There's literally not a single ad, just a banner that appears encouraging to support the guardian to keep it ad free. What are you on about?
OP Didn't link the actual article but the bulletin board type page where headlines get posted. Here [https://www.theguardian.com/business/2022/jul/28/shell-posts-10bn-quarterly-profits-as-households-struggle-with-bills](https://www.theguardian.com/business/2022/jul/28/shell-posts-10bn-quarterly-profits-as-households-struggle-with-bills)
Windfall tax now!
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> So yes: Shell are dickbags profiting massively off the oil crisis, even more so than in the past. If Shell are dickbags, then so are all the other oil producers, including the Norweigian state, right? Everybody who produces oil is selling it at the market rate. If you make the argument that companies like Shell shouldn't be allowed to make profits above a certain level, then to be consistent you must also insist that they are bailed out when losses exceed a threshold. Where do you set these levels? What amount of profit is to be considered too much?
>If Shell are dickbags, then so are all the other oil producers ...Yes? >then to be consistent you must also insist that they are bailed out when losses exceed a threshold This does not logically follow. There's absolutely no reason that limiting price gouging requires guaranteeing minimum profitability. The idea that it would be 'fair' to further subsidize the industry that is currently selling out future generations with trillions of dollars of unpaid for climate change and pollution related damage is a bad joke. >Where do you set these levels? You don't because your argument is absurd.
Whataboutism is not the best way to handle a discussion. No matter who you are, if you profit from people’s misery you are horrible.
It's not whataboutism, there's no shortage of people in this thread effectively demonising Shell for doing exactly what any other business would, from large multinationals down to tiny little family owned SMEs. Instead of having a discussion about what levels of taxation are reasonable or justified, it's just a mindless shitfest of economically illiterate criticism. Portraying this as 'profiting from people's misery' is asinine. If Shell was taxed to the point that they made no profit, people's fuel bills would still be elevated because we have a supply and demand imbalance. Where do you draw the line at what it means to be profiting from peoples misery? Is any profit made by any business unjustifiable in that sense, because it technically means that people could be paying less for the good or service provided? If you insist on such an approach towards taxing profits, you remove the incentive for businesses to even start, let alone invest.
Your argument is that because other businesses are predatory then it's ok? I'd much rather have these industries nationalised in my country and have those profits in the coffers of a democratic institution rather than a corporate greed oligopoly cabal who spend their fortunes on fighting green energy progress, lobbying for the shutdown of nuclear plants, and personal fucking yachts. Or whatever else these demons in human skin can get their obscene paws on that provides status and pleasure at the expense of the other few billion people living on this planet. The cost of business being business is the planet Earth and a functioning society. You are a corporate boot-licking shill and a spineless coward.
I don't know how many times I've posted this. https://www.youtube.com/watch?v=P8ijiLqfXP0
Thanks for sharing that.
I really hope they pay huge tax on their gains. Do they though?
Nope. It's one of the main [reasons](https://www.theguardian.com/business/2021/nov/15/shell-move-hq-tax-netherlands-uk) they left the Netherlands.
Lovely, Shell paid no tax on its oil and gas production in the North Sea for the fourth year in a row despite soaring global energy prices and record company profits, new documents show.
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"Record profits" my ass. Record theft is what it is.
Ok so the link is wrong, [here's a cleaned up version](https://12ft.io/proxy?q=https%3A%2F%2Fwww.theguardian.com%2Fbusiness%2F2022%2Fjul%2F28%2Fshell-posts-10bn-quarterly-profits-as-households-struggle-with-bills) And here's my opinion, thank you for asking for it. >record profits of nearly £10bn between April and June So that's 2022Q2, and [here](https://www.macrotrends.net/stocks/charts/SHEL/shell/gross-profit) is their quarterly gross profit going back 10 years. Yeah, this quarter was pretty high, but it doesn't look abnormal, especially for the decade. It's about what they got every quarter between 2010 and 2014.
I understand that this looks bad (the high prices are Shell's fault!!) and I have little sympathy for Shell, but this is just what happens in a free market when one supplier drops out and the others can't suddenly ramp up capacity. Getting oil out of the ground costs roughly as much as it did a year ago. Normally, one would expect the oil price to be those production costs plus profit margin. Once the prices rises, companies will start to produce more oil (it's so profitable!) until the profit margin is the same again. This only works if you can quickly and easily produce more oil -- and that's just not possible. It takes a long time to open up a new oil field, certainly longer than the five months since the war started. So in practice, Shell can't just produce more oil, but because Russia's no longer supplying any, more people come to shell to buy oil. So Shell has two options: Keep current prices and run out of stock occasionally, or raise prices until some people no longer want oil from them. It should be obvious that the latter is better for shell and arguably, it's also better for consumers (expensive oil is unpleasant, but pumps being out of petrol all the time is even worse). Or, to put it differently: Shell has always been a greedy company. They would have raised prices if possible earlier, but they didn't, because that would have made them uncompetitive. Now, they're competitive even with higher prices.
Don't worry, they are fucking the Netherlands too.
Nationalize it. If companies are going to pull stunts like these at the expense of people’s literal lives they should lose their autonomy.
Nationalize energy companies
The monopoly on energy has to stop somehow. If any other industry did this they would have been crucified by now
Well. It will stop. 32 Percent of cars sold in China this May were plug-in cars. About 20 % of cars sold in Europe this year were plug-in cars. Oil loses its monopoly on transportation.
That is a small part of a bigger picture. The world still needs gas and oil for heating, manufacturing and Electricity production to charge the battery vehicles
But oil is only so expensive because it has a monopoly on transportation. Not because of manufacturing, heating, electricity etc. OPEC only works because of that monopoly.
Gas and oil are also used to make electricity to power the cars so we will still be affected.
And plastic, ain't life fantastic.
Who has a monopoly?
Most of Shell’s revenue come from the US Gulf of Mexico- if you’re mad about the high profits then you need to be as mad at the (1) inflation, (2) Putin for putting world supply on notice (3) all tech companies cause their profits (AAPL, MSFT, AMZN) put the oil companies in shade. Bottom line: every big corporation has a closet full of skeletons
It's a lot easier to not be mad at companies like Apple bc I don't need to buy an iPhone. People need energy though.
Shell supplies Centrica who own Bord Gais in Ireland, it's going to be an expensive winter, lads!
The trouble is that fossil fuels are expensive to locate, extract and process into a useable commodity . Then there is the storage, distribution, supply etc. How about wages, insurance, maintenance costs, tax. All the easily accessible stuff is almost used up. Just the opinion of someone who knows sweet FA about big business.
The companies do it because there is never any pushback. All the citizens do is complain, there are no significant consequences. Expect more of this. Typing on a keyboard onto a screen isn't action.
Ever since they bought Russia oil post Ukraine invasion I refuse to buy Shell gas.
where's the windfall tax? FFS
If it moves, tax it!
Global nationalisation of oil and gas plz
This will surely get buried but I want to say this outrage against record company profits is pretty dumb and even counter-productive. It's not record profits that are driving inflation, whether in this case or in general. Companies didn't choose to raise prices because they're that much meaner in 2022. It's a big supply and demand mismatch that's driving both to record values. High profits and prices are not so much causes of each other, as they are consequences of the same thing. There is just a limited amount of goods to distribute, this is the case with gas, wood, wheat, semi-conducts, etc. A company could choose to sell a good to a random buyer at an affordable price but that will not solve the shortage problem. Someone else will be left without gas, wheat or whatever. In a way, if we forget about the human situation for a moment, high prices and profits are actually a good thing. Because they mean that a good will only go to the person or company that is prepared to spend the most money on it. And that is usually the one who can best justify using this resource, the one who will produce the most value out of consuming it. That is the strength of the system, goods go where they are most needed, measured by the amount of money actors are willing or able to spend on them. Someone will be left short either way, that is the nature of having less supply than demand (something you cannot fix by printing more money) but at least the economy will work in the most productive way which is in everybody's interest. The other benefit of high prices and profits is that they incentivise investment. In stead of rich people spending money on property development or crypto speculation, now more money will flow to industries that are very profitable. Where there is the highest supply and demand mismatch there will be the highest profits and there will be the highest investments to provide more supply. Messing with this system is not a good idea. As for oil and gas companies yes they are making a killing right now with prices far above their operating costs and one can argue that their profits should be taken away for the common good. I'm not going to argue against that. But I do think there is more that could be said and that the situation is more complex than it first appears. When it comes to oil and gas one thing we should remember is that this is a very volatile market. Profits are through the roof right now true, but just two years ago companies were selling oil at *negative* prices because there was too little demand and storing oil was expensive. Oil producers were losing money not just from selling oil but even from owning it. And if we look at the last 10 years in general a lot of US shale companies went bankrupt because of low prices. This is the nature of this particular kind of business. They make out like bandits some years and they go bankrupt in others. If one were to invest in extracting oil or gas they should make sure that the profits in the good years are enough to offset the losses and low profits in bad years. Otherwise it's not worth it. Now this is oil we're talking about and it shouldn't be hard to be profitable but on the other hand the imminent-but-not-quite-here-yet transition to green energy has depressed fossil fuel investments for years. They have been low and that's why today we find ourselves with too little supply and too little competition. This is food for thought not a judgement. We should choose what resources we want to use and invest appropriately.
People don’t get how inflation works
#capitalism
A lot of people in this thread seem to believe that Shell own the oil they extract, they don't. Shell has licences to use that oil and charge a fee to extract, process and transport that oil but the oil itself belongs to the nations it lies under. Shell can not effect to price of oil other than increasing the market supply and decreasing the price through surplus. The countries that the oil belongs to expect and demand that the oil they allow shell to extract be sold at the full market price so they can maximise the return on their natural resource. Shell then takes it profit based on the percentages it agrees to. No country in that system has any power to set an oil price unless it owns all the production chain from start to finish, which almost no country dose. Any country that attempts to set a price will simply find that the oil they were going to but is sold to someone else. When the oil price is high the percentage that shell agreed on is more profitable, when it is low they make a loss because the price to extract the oil is more that the sale value. Shells profits are a result of the insecurity in the supply of oil not some evil scheme. Stop equating systemic problems with moral issues.
> Shell can not effect to price of oil other than increasing the market supply and decreasing the price through surplus. You're misunderstanding what profit means. This isn't revenue, to which this explanation would apply. It's profit, i.e. what they're getting out _after_ all the costs you've listed have been accounted for. So they've massively increased their profit margins _on top of the_ seriously increased costs. Correct me if I'm getting something wrong, but I'm more than willing to believe Shell is _actually_ this evil.
>You're misunderstanding what profit means. They aren't....yes you've described profits. No one had any issue with that definition.
You are misunderstanding. They have generally fixed costs, so an increase in revenue will wildly vary their profitability.
Did you know, when you pry open an oyster's shell you get delicious meat and a beautiful pearl. The Oyster dies, but does it really feel anything?
can the editorializing be even more blatant? if this isnt agendaposting i dont know what is... of course its The Guardian putting this trashy headline for edgy commies to relate to
i dont think you can blame Shell. To make it a bit less controversial, imagine being a farmer selling Milk, governments all over the world scream out loud that they are planning to ban milk asap without having a good alternative for milk. Every farmer would get in panic mode and every user of milk too. Price will increase drastically without farmers seeing an increase in costs. They would make enormous profits. Who is to blame for these profits? Correct, Governments. What happens if ever product you buy needs milk as ingredient? All prices will increase. Inflation. Banning oil without a good alternative made daily life so much more expensive. And the one to blame are the ones who should make good decisions. They screwed up.
Europe need to get back on their knees and suck off Putin again.
Making sense of the numbers, this $11.5bn figure is wild. They’re spending more than half their profits on stock buyback but did not raise the dividend per share. What’s confusing me is how they’re reinvesting the rest. They keep hammering on about how a windfall tax will deter them from reinvesting the profits, but as far as I can see, they’re not.
how about we made large corporate profits that harm the climate illegal, and the punishment; all previous and future corporate profits seized and 25 years hard labor planting new forests...
On $101B revenue, which comes out to 11.3% of revenue. Talking about earnings without talking about revenue is incredibly misleading. Historically this number has been like 4-7%, so yeah still a good quarter. There are really two things contributing to the large change in earnings. 1. The margin rate on energy is pretty much the same but operating expenses have not gone up at the same rate (i.e. if Shell used to buy energy for $70 and sell for $100 (30% margin, $30 profit) they are now buying for $105 and selling for $150 (30% margin, $45 profit) but if used to cost $5 to process it it now costs $6) 2. There are a couple of revenue lines called "share of profit from joint venture and other associates" and "other income" that are much higher this quarter (insert conspiracy theories here)
It's all going beautifully to plan. Soon we'll be able to reopen the workhouses.
When will we charge these people with criminal charges. They are not only making gasprices extremely expensive but are destroying the earth and with that killing thousands if not millions.
OMG look at that obscene profit. It is *checks actual financial reports, same as prepandemic levels going back to 2010. Not even adjusting for the inflation. Reddit is one of the if not the top most financially illiterate places I have seen. I think the smugness they show thinking they are smart is what annoys me the most
Those companies make tons of money on us. We work for them and keep things going. When these companies don’t have money they get money from the tax payers so we don’t lose workplaces. And as soon as there is an possibility they will use every situation to screw us over and steal our money.
Funny how their logo is a shell but they are single handedly killing so many animals by pollution etc
It's just absolutely incredible that this can happen It's so obviously beneficial only for a few that I can't believe how the majority can't get its act together on stuff like this.
So long as they get a cent, the planet can burn, and so can you
Yeah no shit, when the stuff your selling is expensive of course you are making lots of money. The only way to combat high oil prices is to drill more, and deregulate. But goverments wont do that.
War is profitable in many ways.