Oil majors make big profits but not at the pumps

By Margaret Orgill

LONDON (Reuters) - Furious motorists faced with high pump prices have accused oil majors of profiteering, but as the firms announced bumper profits this week, they said they were making little petrol sales.

BP and Shell argued the gains from record oil and petrol prices should not be used to protect consumers in a highly competitive market and instead helped to compensate for the difficulty of making money from refining and sales.

"Good operating performance, combined with increased oil and gas prices, offset the impact of weaker downstream conditions," said Shell's CEO Jeroen van de Veer, after announcing a 5 percent rise in second-quarter profits on Thursday.

Fending off calls for a windfall tax on their earnings, the majors have said retail pump prices are the result of high levels of duty in Britain and elsewhere in Europe.

At the same time, the soaring cost of unrefined crude has squeezed any gains they could have made from turning it into petrol.

"We make very little per litre. In Britain we aim for a penny but sometimes we don't even make that," said Robert Wine, a spokesman for BP.

Petrol prices rose to as high as 119.7 pence a litre in mid-July, of which 57 percent was tax. They have since come down as crude has fallen by around $20 a barrel from its $147.27 peak and as cut-throat competition between supermarkets selling petrol has further eroded potential profits.

Shell on Thursday reported second-quarter refining earnings falling to $1 billion (500 million pounds), from nearly $3 billion a year ago.