Worried about high energy prices? Paying too much at the petrol pump? Then cheer up! There is splendid news today! At a time when the British economy is sinking fast, one sector is doing very well indeed. BP has seen its latest quarterly profits more than double.
Oil prices hit an all-time high of $147 a barrel in July, but have since fallen back sharply to about $62 this week. But this has had no noticeable effect on the profits of the big oil companies who are in no hurry to pass on the price reductions to their customers.
Reporting its results for the three months from July to September, BP's replacement cost profit totalled $10bn (£6.4bn), up 148% from a year earlier.
BP said high prices had "obviously helped our absolute result", despite the recent sharp fall. Obviously!
BP chief executive Tony Hayward said that oil prices could decline further as the world enters a recession. But he was not too worried about this: "I believe that BP is well-positioned to cope with such volatility," he said. "We think the current turmoil may in fact create opportunities for us and we will look at those very closely."
Yes, as we know, the giant oil monopolies always do well, whether the economy is up or down. After all, people will always need oil. And just to prove the point, at a time when most shares are falling, BP’s shares were up 2.6% in early Tuesday trading in London.
BP's upstream operations - its oil production business - made an underlying pre-tax profit of $11.5bn, up 82.5% from a year earlier. This included a profit of $849m from BP's troubled TNK-BP Russian joint venture. BP's downstream operations - its refining and petrol sales business - made an underlying pre-tax profit of $1.3bn, up 70% from the same period last year.
BP also saw overall production levels rise slightly from a year earlier, despite commentators predicting a minor fall. Analyst Tony Shepard of Charles Stanley said BP's results were "way above the market expectations".
Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, was also very impressed: "These numbers have comfortably surpassed the top end of expectations and reiterate BP's position as a true oil major."
Where have these extraordinary profits come from? They come on the one hand from the unpaid labour of the workers in the oil industry, and on the other from the high prices paid by the consumer (also workers) at the petrol pump.
As well as benefiting from the high price of oil, BP said it had also benefited from "very real operational improvements in refining and rigorous cost control across the company". We all know that the main costs that are kept down are wages, since the workers who produce the wealth of society must be prepared to sacrifice in times of crisis. But the profits and dividends – whether of bankers or oil companies – these must be nurtured and protected at all times.
The only dark cloud in an otherwise clear blue sky was BP's Russian joint venture TNK-BP. This has apparently been dogged by a power struggle this year. An ugly dispute has broken out between BP and a group of Russian billionaires that control the other 50% of the business.
This conflict has led to the departure of former TNK-BP chief executive Robert Dudley last month. The Russian oligarchs, who owned their stake in TNK-BP through a consortium known as Alfa Access Renova, had accused Mr Dudley of favouring BP. Mr Dudley said he had faced "sustained harassment".
We know that conflicts with Russian oligarchs can end very badly, and so our heartfelt sympathy goes out to poor Mr. Dudley. But BP need not worry. Lord Mandelson is now in Moscow representing Britain’s interests, and who better to reach a friendly agreement with Russian billionaires than this incorruptible doyen of New Labour? All that is required is a few days on a luxurious yacht…
