The Sunday Times: Big oil groups prime pumps for £1 a litre: “THE oil giants Royal Dutch Shell and BP are to spend millions upgrading their petrol pumps and station forecourts to allow them to charge higher prices. The companies, which last year reported combined pre-tax profits of £30 billion, are set to raise their prices…”: Sunday September 04, 2005
Dan Box and Dominic Rushe
THE oil giants Royal Dutch Shell and BP are to spend millions upgrading their petrol pumps and station forecourts to allow them to charge higher prices.
The companies, which last year reported combined pre-tax profits of £30 billion, are set to raise their prices, with a litre of unleaded petrol threatening to exceed £1 in the aftermath of Hurricane Katrina.
Industry sources estimate that up to 70% of the country’s pumps are unable to display figures higher than 99.99p a litre. Retailers said the wholesale price of petrol charged by their suppliers rose last week and more increases are on the way, making £1 a litre inevitable.
“Even as recently as 12 months ago we weren’t anticipating prices at this level,” said a spokesman for BP. “The two issues are the pumps and the signs outside and, clearly, some work will be required to both.”
Shell said: “We are looking at the issue and considering all the options.” Between them, BP and Shell control 2,300 of the UK’s 10,000 petrol stations.
The impact of Katrina, which last week tore through the Gulf of Mexico where much of the American oil industry is based, caused the price of oil to hit a record intra-day high of $70.85 a barrel, before finishing the week at $69.32.
As the price of petrol soared in response, panic buyingcaused queues to form at American petrol stations, while shortages were reported on forecourts in New York and rationing was introduced in some states. Such chaos has not been seen since the oil shock of 1979.
The Dow Jones industrial average fell 0.1% on Friday, to close at 10,447.37.
On Friday House Republican leader Tom DeLay of Texas suggested new legislation could be implemented to make it easier to build refineries and overcome the shortage of American refining capacity.
The release of American oil reserves and help from the International Energy Agency, which agreed to release 60m barrels from its own reserves, also seemed to be easing pressure in America this weekend.
On Friday night, John Snow, the Treasury secretary, said the economy was proving resilient to the “mind-boggling” impact of Katrina.
“Clearly this will be a challenging time for the economy,” he said. “The fortunate thing is that the economy is performing so well.”
Despite this, the investment bank Goldman Sachs predicts that the long-term price of oil will remain above $60 a barrel. Thomas Stolper, a Goldman economist, said: “There is still the possibility of a ‘super-spike’ up to $105 per barrel.”
Paul McManus, senior vice-president at Independence Investment, an American fund manager, said: “I consider this event as critical, if not more economically damaging, as September 11.”
Many of Britain’s largest manufacturers are already struggling to deal with rising energy costs. Some of the country’s leading brickmakers and ceramics manufacturers have drawn up contingency plans to close production during January if these costs mean running their operations is not viable.
http://business.timesonline.co.uk/article/0,,13129-1763554,00.html
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