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Shell profits surge $ 1.2 billion thanks to record high fuel prices

Oil company Shell expects refining profits to jump $ 1.2 billion amid record high fuel prices that drivers and households across the UK are struggling to financially fill. Announced that there is.

Oil and gas giants said in the latest trading information that the profit margins from refining crude oil into petroleum products such as gasoline and diesel tripled from the $ 10.23 barrel recorded in the first quarter of 2022. He said it is likely to be more than that. $ 28 a barrel in the second quarter. The company expects this to add $ 800 million to $ 1.2 billion to the financial results reported later this month.

The news came after Shell announced a $ 9.1 billion profit recorded in the first quarter of 2022. Analysts expect overall profits from the second quarter to be significantly higher — perhaps as much as $ 10.8 billion.

With unprecedented highs of 191.5p for 1 liter of gasoline and 199p for 1 liter of diesel last weekend, it is unlikely that Shell’s announcement will be warmly welcomed, said Luke, AA’s fuel spokesman. Will do so. Bosdette “leaves a bad taste in the driver’s mouth”, something addressed by a shell spokesman:

“We are, of course, aware of the burden that rising prices place on society as a whole, especially vulnerable consumers and communities, and concerns about the benefits that current market conditions are driving,” said a spokesman. rice field. “In reality, the refining margin is set by the market, not the individual players entering the market.”

Shell’s profits are largely supported by current fuel costs, but oil and gas companies are not the only ones benefiting from geopolitical events. When oil prices plummeted in April 2021 due to a lack of demand as a result of a pandemic, oil companies and oil-producing countries shrank significantly.
However, as demand increased again, producers did not increase supply at the same rate, leading to an imbalance between supply and demand, resulting in higher oil and fuel prices for consumers.
This strategy of reducing oil production and selling at higher profit margins proves to be very advantageous as ExxonMobil, Shell, Chevron and BP all made record profits last year. it was done.
Oil prices had already skyrocketed in early 2022, and Russia’s invasion of Ukraine further increased prices as Western nations imposed sanctions on invaders and attempted to withdraw from Russia’s oil. Oil producers have again refused to significantly increase production to fill the supply gap. This means that the situation of rising pump prices has worsened.

Supply shortages (partly due to lack of refining capacity) and high oil demand from the pandemic-free economy were good news for people like Shell, but worse for drivers.
Activists protested earlier this week that fuel prices continued to rise, despite then-Minister of Finance Rishi Sunak cutting fuel taxes by 5p as part of a mini-budget in the April Spring statement. I used a highway all over the UK.
Soaring motor fuels, household kerosene and gas have been the main contributors to recent inflation that has hit the UK economy, with the knock-on effect of pushing up costs in addition to the war in Ukraine. Further increase household finances for food and other commodities.
Crude oil prices have fallen slightly in the last five weeks, but pump prices haven’t fallen yet, leading to criticism that retailers are profiting from the current situation, and the industry has denied this. increase.
The Gasoline Retailers Association, the UK’s leading independent avant-garde body, acknowledged the increased margins on fuel sales and justified it based on last year’s sluggish sales.
According to the group, customers bought 15% less gasoline last year due to a pandemic, so they needed to increase their profits per liter sold to cover the cost.
However, gasoline demand has almost returned to pre-pandemic levels, and pump sales losses are no longer an issue. The price hasn’t dropped yet.

Shell’s profits raise the question of what the company is actually trying to do with them. This in itself can affect future fuel prices. In response to record oil company interests, US President Joe Biden urged the oil industry to invest in capacity building to ease the burden on consumers.

“During the war, far more than normal refinery profit margins passed directly to American families are unacceptable,” he said.

So far, the industry has been reluctant to listen to Biden’s sentiment. Shell says it will invest £ 20 to £ 25 billion in the UK over the next decade in low carbon energy and UK gas and oil supplies, but by the end of 2021, it paid shareholders about £ 4.3 billion.
Profit and shareholder value are higher than ever among US oil producers, but reinvestment in infrastructure and production is lower than ever.

The inability of companies like Shell to invest in pumping and refining capacity expansion in the light of these profits worries drivers that low-volume / high-margin business strategies are in great favor of oil companies. There is a possibility. The industry has no plans to relieve pressure (and therefore price) immediately.

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Shell profits surge $ 1.2 billion thanks to record high fuel prices

Source link Shell profits surge $ 1.2 billion thanks to record high fuel prices

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