Insights from the UK and beyond
Bumper profits for oil companies – worth picking a fight?
It is not surprising that many people find it thoroughly irritating to read headlines about oil companies, such as Shell and BP, making bumper profits thanks to high oil prices while consumers pay ever more to heat their homes.
With crude oil prices having fallen to around $70 dollars from more than $147 in July even Chancellor Darling felt compelled today to say the recent drop should be passed on swiftly to the consumer,
That’s a noble sentiment but are governments really able to tell corporate giants what to do? Whispers of windfall taxes have come and gone but the government didn’t even introduce one on the utilities.
Restricting companies in a way that could eat into their profits might not be a good idea anyway as some of them account for a large share of the dividends paid to UK pension funds by FTSE 100 companies – a whopping 10 percent in the case of BP, for example.
Moreover, some economists argue that measures such as windfall taxes are a short-termist solution to a permanent problem and thus don’t work.
What do you think? Is it time for the government to stop talking and show some muscle?