Higher oil price boosts BP profit
July 29, 2008
Oil giant BP has announced a 6% rise in profits for the second quarter of 2008, largely thanks to a sharp rise in the price of oil.
Replacement cost profit after tax was $6.85bn (£3.4bn) between April and June, compared with $6.5bn a year ago.
Profits would have been higher without changes imposed by accounting rules. During the quarter, the price of a barrel of oil rose by about 35%.
Unions are calling for a windfall tax on BP and other oil producers.
Tax debate
In the first half of the year, BP said it had made $13.4bn, a rise of 23% on the first half of 2007.
Profits would have been even higher without the effects of international accounting rules which meant that BP had to recalculate the value of its UK gas contracts. This made a difference of almost $2.1bn in the second quarter.
BP makes the bulk of its profits in its upstream business - the exploration and production of oil.
Thanks to the rising cost of crude oil, its pre-tax profits in that division were 51% higher at $10.8bn in the second quarter, compared with $7.1bn in the same period in 2007.
In the downstream business, which includes refining oil and selling it at its 24,000 forecourts worldwide, it made a profit of $539m in the second quarter, a significant fall from the $2.7bn it made in the same period a year earlier.
In the UK, the downstream division made a profit of $118m compared with $937m in the second quarter of 2007. BP said refining margins were lower than a year ago.
BP and other oil producers have been facing calls from unions for a windfall tax on their profits to help those struggling to cope with higher energy costs.
"A windfall tax now would ensure that the money was there to help the old and vulnerable through these tough times," said Unite general secretary Tony Woodley.
"Tax the fuel companies now so that those who helped to create these mega-profits get their rightful share of them."
However, BP insists that it is already one of the UK's largest taxpayers. A company spokesperson told the BBC that the company paid $14.5bn in taxes worldwide last year, including $2.3bn in the UK.
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