Newspaper article The Evening Standard (London, England)

No Rip-Off in BP's High-Octane Performance

Newspaper article The Evening Standard (London, England)

No Rip-Off in BP's High-Octane Performance

Article excerpt


TEN years ago, BP was pretty close to being bust. It is the singular achievement of its current chief executive Lord Browne that he has transformed it by slashing costs, attacking overcapacity and, three years ago when the oil price was below $10 a barrel, having the courage to go out and buy Amoco and Atlantic Richfield.

Because the industry was on its uppers, he got them for what now looks like a knockdown price. Fortune favours the brave and, in today's bumper half-year profits figures, he has reaped a just reward for the risks he took.

In most countries, BP's achievement would be applauded. In this country, the chances are it will be attacked for ripping off the motorist. The facts, though, are rather different.

First, BP's petrol retail business in the UK loses money. Second, the amount the oil companies take per litre is lower in Britain than in any other major European country. Petrol is highly priced in Britain only because the Government taxes it highly. And when all else fails, Chancellor Gordon Brown can put himself on the side of the angels by saying that high prices curb demand and help the battle against global warming.

If, on the other hand, BP reduced its profits to zero by deciding to subsidise petrol, it would make barely a penny difference to the pump price - and bankrupt the company in the process.

Most people fill up at supermarkets, where the food companies use petrol as a loss leader to attract shoppers. Their cut-price fuel renders it impossible for the oil companies to make money at the roadside - hence the proliferation of forecourt shops to try to persuade motorists spend a few pence more.

The results are plain to see. Some 30 years ago, there were 30,000 filling stations in Britain. Today, there are 13,000 and that number is expected to drop by 5000 over the next five years.

One of the reasons British companies do not do as well as they might is that the British even now do not accept that it is good for businesses to make a profit, and pillory them for being greedy. …

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