Shell announces biggest profits since 2008

I have just read your long quote. Nothing new in it, that is how markets have worked since the year dot. Not the current specific post holders, but there have always been people behind the scenes controlling how much of a product reaches the market, hoarding and flooding markets etc etc. That is just basic entry level economics.

Maizie I have said nothing in opposition to a windfall tax. I am all in favour, what I was pointing out is that the majority of 'greedy shareholders' who sit their like Midas counting their ill-gotten gains are pension funds and insurance companies. In other words, the majority of the those benefiting from these above avaerage profits are all those GN members, and many more reeciving or saving into occupational or personal pensions

Oil companies are not supermarkets competing for custom by offering the lowest prices. The price of energy is decided by world markets, which are external to the oil companies, were they to get together to try and manipulate prices, there would be outrage. There are laws against companys working together to control prices.

But a huge question mark hovers over the 'markets' that determine oil prices.

This is interesting from economist Ann Pettifor

Why are governments impotent?
In an age of economic and ecological crises

While supply and demand have undoubtedly played a role in the dramatic volatility of oil, gas and food prices, the real cause of rising high prices (and their subsequent crashes) lies elsewhere. Understanding this matters because the astronomical rise in the oil price has had severe, and in some places catastrophic consequences for the world’s people. And the oil price shock has accelerated climate breakdown. Carbon emissions have risen as countries fire up coal mines to substitute for costlier fossil fuels.

Why are these chaotic price swings and their dire consequences not managed or mitigated? Why are powerful governments – and central banks – impotent in the face the economic, ecological, and political turbulence caused by this market?

The answer lies in the way in which deregulation empowered those active in financial markets. Prices of commodities in those markets are determined by speculators on Wall St and and at the Chicago Mercantile Exchange – not by politicians in Riyadh or Moscow. Not by the CEOs of global oil companies like BP or EXXON.

Not even by rising demand.

Instead prices are set on global futures, options and derivatives markets, where investors and traders speculate on the direction of the price of oil, and thereby affect the ‘spot’ (or current) price.

As the US Energy Information Administration explains, there are differences between participants in these two marketplaces for oil. Commercial’ traders (e.g. oil producers and airlines) buy and sell physical quantities of oil. ‘Non-commercial’ traders (Banks, hedge funds, commodity trading advisors, and other money managers with towering portfolios) don’t buy or sell oil. They simply buy, sell and speculate on financial instruments - futures contracts and derivatives - embodied in pieces of paper.

The system, the global economic order - designed by economists and central bankers and endorsed by elected politicians - licenses and empowers the owners of capital to drive their capital at whim across borders and to use that capital for rent-seeking and speculation. They may do so without regard to the consequences for a nation’s exchange rate, its public finances or its essential commodity markets.

annpettifor.substack.com/p/why-are-western-governments-impotent

Those windfall profits are purely a result of speculation by those who have no concerns about its effect on national economies... It's quite horrifying in a way...

The same speculators nearly crashed the global economy in 2008...

I'm sorry, MOnica, but we all 'should' know that investing in anything apart from government bonds is ultimately just speculation.

I don't buy the 'don't call to tax excess profits because 'pension funds' argument. What if oil prices hadn't risen (if there had been no Russian invasion of Ukraine) and the oil companies had just made their 'normal' profits? I don't think anyone would have thought that pensions would be suffering under those circumstances.

Much as I feel for the poor oil companies having those high prices forced on them by external actors these are windfall profits, completely unearned and, what is more, taking money from people who can in many cases ill afford it. There is no reason why shareholders, be they individuals or pension funds, should benefit from them when part of the profits could be used for the benefit of all our citizens.

Besides which, I thought that (if the hoo haa around the bond yields is to be believed) pension funds had much of their monies in government bonds..but felt they had to sell them because of liquidity problems caused by their riskier, higher potential profit, investments failing...

(yup, I do know about spreading the risk...)

Property is always a better investment, but the way people have been buying multiple properties and relying on tenants to pay their mortgage seems to me just ethically wrong.

fairfraise

This one isn't.

So what do you imagine the people with pensions and shares do with their money?

That argument is contributing to the increase in inequality.

This one isn't.

fairfraise

And remember that small shareholders as well as the large ones are the ones who put their money into the company and are entitled to some return on their investment. Monica made an excellent point. We're not all fat cats.

Less money goes into companies now than for decades. People prefer to invest in property.

What about those under retirement age or the other 34%? Households over retirement age are already wealthier on average than those of working age.

And remember that small shareholders as well as the large ones are the ones who put their money into the company and are entitled to some return on their investment. Monica made an excellent point. We're not all fat cats.

M0nica but 66% of those over retirement age do receive one

Thank you for that information. I don't receive one, was curious.

I’m not sure why Shell don’t pay tax in the UK if they pay tax in other countries. Just why not?

Good post M0nica

Yes, I know that, but 66% of those over retirement age do receive one . /www.gov.uk/government/statistics/pensioners-incomes-series-financial-year-2020-to-2021/pensioners-incomes-series-financial-year-2020-to-2021
and 87% of those in work are contributing to one www.ons.gov.uk/employmentandlabourmarket/peopleinwork/workplacepensions/bulletins/annualsurveyofhoursandearningspensiontables/2021provisionaland2020finalresults so that the fact that so much of these dividends go to the organisations that help fund our pensions matters to the vast majority of people in this country.

Oil companies are not supermarkets competing for custom by offering the lowest prices. The price of energy is decided by world markets, which are external to the oil companies, were they to get together to try and manipulate prices, there would be outrage. There are laws against companys working together to control prices.

There is such an unthinking reaction that high dividends mean rich men in their counting houses counting out the money, that certainly happens, but it also means that pension funds and insurance companies have the funds to pay the pensions they are committed to because there has been concern that in this long period of low interests rates and returns on investments, some may find themselves getting into financial trouble.

It is surely a question of fairness. We are not living in a casino.

MOnica Everybody doesn't have a company or personal pension. Just about everybody does pay fuel bills.

Do not forget the major shareholders in all these big companies, are insurance companies and pension funds, so much of their dividends will be going to the organisations that provide all of us with company or personal pensions with part of our income.

This means that it is more likely that we will get pension rises that begin to match inflation.

Do not throw the baby out with the bathwater.

The Liberal Democrats demanded a windfall tax on the energy companies more than a year ago

Subsequently the Labour Party agreed

What will it take for the Tories to admit that this is the right thing to do?

fhld.uk/en/article/2021/1417486/lib-dems-demand-windfall-tax-on-fossil-fuel-companies-to-support-households-this-winter

varian

If this self serving government refuses to impose a proper windfall tax on companies like Shell, even when is boss practically begs to be taxed it is the ultimate proof that their right wing idealogy matters more to them than the good of our country.

BP have said the same as Shell. I know somebody who was at a shareholders' meeting and the company was saying that it wanted to be taxed more because it couldn't use the excess profits effectively.

If this self serving government refuses to impose a proper windfall tax on companies like Shell, even when is boss practically begs to be taxed it is the ultimate proof that their right wing idealogy matters more to them than the good of our country.

The shareholders won't go short - why should the public?

Shareholders and "the public" are not two entirely different entities.

Even if many of the general public don't have individual investments in shares or funds, they may have an ISA, a pension or future pension which may well hold a huge amount of shares in companies such as Shell.

But yes, they could still be taxed and offer investors a good return.

They, not that

GrannyGravy13 you will be surprised to learn that paid no tax on its UK oil and gas production last year and instead received £100m from the taxpayer, despite paying £17bn in tax in other jurisdictions including Norway, Qatar and the USA.

In their own words::-
www.shell.com/sustainability/transparency-and-sustainability-reporting/payments-to-governments/_jcr_content/par/textimage.stream/1648821895529/be3f2bc19cb9cdcdeaec6c11d996ed78ab398682/report-on-payments-to-government-2021.pdf

I’m not an expert either, that was on the news as I reported. But it did use the words windfall and shareholders.