Let’s be clear, businesses cannot survive without making a profit. Reasonable returns are vital for all companies, particularly for those small firms who represent the commercial heartbeat of the UK.
Excellent profits ensure company sustainability, new investment, more jobs, strong pensions and security.
But the latest gargantuan levels of profits announced by BP and Shell not only seem disproportionate, but reek of a greed that has become endemic throughout the fuel supply chain.
Oil giant BP, which operates nearly 15 per cent of UK filling stations, yesterday reported its highest profit for eight years — £9.5billion for 2021.
The company made nearly £3billion in the final quarter of the year when oil and gas prices surged. And last week Shell — with 13.4 per cent of UK outlets — reported annual profits of £14.3billion, which analysts believe will grow to £23.6billion by the end of its financial year in June.
It is clear where a huge chunk of this cash comes from — the petrol pump. Average profit margins for diesel have increased by 150 per cent in the last two years, according to the RAC Foundation and FairFuelUK.
Petrol margins have more than doubled. In December, FairFuelUK reported that pump prices were 30p per litre more expensive than the previous year, yet the wholesale costs of petrol and diesel were only up 18p.
Even allowing for market increases in margins and distribution costs, drivers in the UK have been paying up to 10p per litre more than needed in recent months.
Before the pandemic, in 2019, oil companies were making 11.6p a litre profit from petrol and 12.2p on diesel. Today, the profit per litre has risen to almost 30 PENCE for diesel and nearly 25p on petrol.
As a consequence, pump prices have reached sky-high record figures, with 160p-plus now standard on our motorways.
One filling station in the albeit remote Scottish Highlands was charging 184.9p a litre last October.
Using a global energy crisis to exploit customers who have no choice but to heat their homes and fill up their cars and vans is totally immoral.
So it is hardly surprising there is now a clamour for a windfall tax, like those inflicted on utility companies more than two decades ago.
This punitive approach goes against every part of my free-market mentality. But when Shell boss Ben van Beurden, 63, saw his personal shares increase by £7million simply because of world events, my capitalist spirit became severely tested.
Of course they disagree that their profits are excessive. They argue that they need them as they have to invest in future-proof technology and the great leap to greener energies.
Being forced to reduce their haul would put off investment and delay Britain’s net zero ambitions, they add – somewhat threateningly.
But no one is saying they cannot make a buck — and of course they have to invest in the future. Yet these are exceptional profits and they know this. They are beyond what the market expected.
It is not clever new management or marketing skills from the oil companies that are responsible for them hitting these eye-watering figures. No, their wallet-busting dividends have largely been down to pure luck.
The price of Brent crude oil has rocketed more than 50 per cent in the last 12 months. Meanwhile, demand for energy, petrol and diesel has climbed too, as we are released out of the shackles of Covid.
Today, the All-Party Group for Fair Fuel for Motorists and Hauliers has written to oil companies and fuel wholesalers demanding to know why wholesale falls in fuel were not passed on to drivers in 2021.
And that is why FairFuel backs The Sun’s long-standing call for a PumpWatch independent body to bring rocketing fuel prices down to earth.
You do not have to be a genius to see why the Treasury is resisting getting its hands dirty — as fuel prices increase, so do its coffers as it creams off VAT on even bigger returns.
But as we hurtle into what many predict will be one of the worst cost-of-living squeezes for decades, to continue to ignore these rip-off prices does a grave disservice to hard-working families.
As Douglas McWilliams, of the Centre for Economics and Business Research, says: “Cheaper fuel would make a significant difference to turning round the inflationary momentum and the cost-of-living squeeze.”
It is in the Prime Minister and Chancellor’s hands to order an inquiry into the manipulation of diesel and petrol prices, introduce PumpWatch, stimulate consumer spending, reduce the consumer price index and help disillusioned voters.