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Original poster

why cant Shell and others absorb price rise?

36 replies

Ceci03 · 08/03/2022 18:39

I don't understand - can someone explain. Shell etc announcing billions in profit, yet they cannot be asked to absorb any of the price increases? Am I thick or what's going on.

OP posts:
VladmirsPoutine · 08/03/2022 18:40

You're not thick. Capitalism doesn't have a shred of empathy. Absorbing prices means lower profits for them and their share holders.

TangerineClay · 08/03/2022 18:41

I read on here that the French president has done a deal with them to absorb the price rises but that our government owns shares in energy companies so less likely to

Blossomtoes · 08/03/2022 18:42

Because apparently they’re investing their profits in new energy sources.

Freddiefox · 08/03/2022 18:43

They can but don’t want too. Rich get rich off the backs of the poor.

There is nothing in it for them.

TeaNCupcakes · 08/03/2022 18:43

Start a petition, I'll sign it!

JustFrustrated · 08/03/2022 18:44

Because actually, they don't see the profits.

Say they "make" £100.

£30 is cost of product/transportation/overhead
£55 goes to the government in "taxes"
£15 is profit.

Of which 50% on average is pumped back into the company for research into future fuel options.

It's actually the government who see the profit.

(Source: listening in to a townhall meeting ran by the CEO of one of the biggest household names)

Lockheart · 08/03/2022 18:44

@VladmirsPoutine

You're not thick. Capitalism doesn't have a shred of empathy. Absorbing prices means lower profits for them and their share holders.
It's ea
Lockheart · 08/03/2022 18:49

@VladmirsPoutine

You're not thick. Capitalism doesn't have a shred of empathy. Absorbing prices means lower profits for them and their share holders.
Second time lucky!

It's easy to dismiss this as though the shareholders are all massively rich fat cats. Some of them are, of course. But many are normal people like you and me, who invest indirectly in shell and others like them through our pensions. Pension providers and their funds are huge investors in the energy and oil sector. If they tank, so do our pension savings.

In short, if e.g. Shell stops paying dividends then it's not just the rich that would lose out.

Companies like Shell are so large and pervasive in our societies around the world that we generally need them to be making large profits. But at the same time, ordinary people also suffer directly through high energy prices. It's quite complex.

HomeHomeInTheRange · 08/03/2022 18:51

I am uneducated in the international oil trade (and possibly thick) but my question is, if it is a matter of market forces, why don’t the nations currently buying from Russia team up with the rest of us and in solidarity just say ‘we will not pay inflated prices’ to the alternative oil producers?

Surely the problem starts further up the chain than the importers?

JustFrustrated · 08/03/2022 18:55

Pretty much this too.

RancidOldHag · 08/03/2022 18:55

why don’t the nations currently buying from Russia team up with the rest of us and in solidarity just say ‘we will not pay inflated prices’ to the alternative oil producers?

Because as we found out in the 1970s, they'll just stop selling. Then what?

roses2 · 08/03/2022 18:56

Shell just bought a load of Russian oil on the cheap. I won’t be buying from them in future.

TheKeatingFive · 08/03/2022 18:57

in solidarity just say ‘we will not pay inflated prices’ to the alternative oil producers?

The alternative oil producers say 'we're not selling to you' then 🤷‍♀️

Hbh17 · 08/03/2022 18:57

Because the only reason Shell (& others) exist is to make the maximum amount of profits for their shareholders - quite rightly. They are not a charity, and if you have a pension scheme, you will benefit from companies making profits - how do you think our pensions are paid for? They are paid for by investments, not from what we contribute as individuals.

hugr · 08/03/2022 18:58

@JustFrustrated

Because actually, they don't see the profits.

Say they "make" £100.

£30 is cost of product/transportation/overhead
£55 goes to the government in "taxes"
£15 is profit.

Of which 50% on average is pumped back into the company for research into future fuel options.

It's actually the government who see the profit.

(Source: listening in to a townhall meeting ran by the CEO of one of the biggest household names)

Shell have 6 billion to shareholders in Feb due to "dramatically rising profits" in the preceding 3 months
hugr · 08/03/2022 18:58

Gave *

Orchidsonthetable · 08/03/2022 19:03

Why should they? They are not a charitable service or a government body. They are a for profit organisation, who offers a product that you can either purchase or not as you see fit.

Palavah · 08/03/2022 19:05

They can, they just don't want to.

VladmirsPoutine · 08/03/2022 19:09

I said to someone the other day that energy should be a human right and not a profit-making endeavour. You'd have thought I said I like to brush my teeth with sewage water from their reaction.

saleorbouy · 08/03/2022 19:10

Shell, BP and others have parted company with shared exploration and refining operations of Russian business. They have lost a significant part of their resources and invested capital in Russia. They with also need to re-establish production elsewhere such as the North Sea, this will again be viable to extract if the cost per barrel remains high enough as resources there are smaller, harder to extract due to water depths.
As with all commodities the price rises as more people want a diminishing resource stockpile, that's just economics, just as staycation prices rose last year during Covid.

sst1234 · 08/03/2022 19:28

Because they are businesses, not charities. By the way, when people come out with this sort of stuff, why don’t they just give up a share of their pension to help everyone else out. Since pensions funds are majority shareholders in publicly listed companies. It’s your money, you can give it away if you want.

WeirdlyKind · 08/03/2022 19:29

The big wigs might only be able to afford one super yacht. I just don't know how they'll cope.

JustFrustrated · 08/03/2022 19:56

It's not 1 or 2 shareholders is it? It's literally hundreds.

And it's sliding scale too

It's not as cut and dried as people think. As a PP previously pointed out, in addition to my (factual) comments.

Fucket · 08/03/2022 20:09

Oil prices are somewhat controlled by OPEC countries, they control the global supply of oil. They have the power to increase supply or restrict it. The last I heard is that these countries did not want to change the global supply in the wake of the Russian invasion. So Shell and other oil traders will be purchasing the price of oil on the open market.

Don’t assume Shell and other oil majors will only be refining and trading their own oil. The prices they pay for crude oil will be reflected at the pumps.

Everything is about to get a lot more expensive.

No trade out of the Black Sea is also going to affect the prices of vegetable oils, molasses etc coupled with the fact the Ukraine farmers are unlikely to be having a bumper harvest this year, I suspect we are in for a tough year or two (or however long the war goes on for).

HomeHomeInTheRange · 08/03/2022 20:43

@RancidOldHag

why don’t the nations currently buying from Russia team up with the rest of us and in solidarity just say ‘we will not pay inflated prices’ to the alternative oil producers?

Because as we found out in the 1970s, they'll just stop selling. Then what?

Then the oil rich countries end up with a stockpile…which causes prices to fall?

Maybe?

I can see it is brinkmanship.