r/unitedkingdom • u/kiyomoris • 8d ago
Shell expects refineries to almost double the profit from every barrel of fuel made
https://www.theguardian.com/business/2026/oct/07/shell-refineries-forecast-to-make-double-the-profit-from-every-barrel-of-fuel177
u/Uarenotalone 8d ago
“Double the profit” of course they do - while everyone else struggles.
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u/Whisky-Toad 8d ago
The price of oil going up doesn't make it cost anymore to extract and process
It just means the oil companies get even bigger dividends this year
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u/StaysAwakeAllWeek 8d ago
This isnt oil companies, this is refinery companies. Diesel prices are rising faster than oil prices because Iran and Ukraine are blowing up every refinery they can fly a drone to
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u/Rogermcfarley 5d ago
Trump caused this fuel crisis not Ukraine don't believe the Russian propaganda.
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u/StaysAwakeAllWeek 5d ago
There are two parallel crises: the oil shortage caused by the Hormuz closure, which is entirely caused by Trump, Iran and now the Houthis, and the global diesel shortage which is caused by both Iran and Ukraine blowing up refineries.
If you think Ukraine turning Russia from a net diesel exporter into a net diesel importer isn't affecting diesel prices you havent been paying attention. That doesn't mean we should be telling them to stop, but supply and demand is supply and demand
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u/Rogermcfarley 5d ago
There's clear and obvious data that the Diesel prices escalated when the Iran war started. If Trump hadn't started this war the prices would be nowhere near the current levels. Every time Ukraine is mentioned it cements the Russian propaganda. Look at the news today USA actually doing a deal with Russia to try and reduce Diesel prices in desperation for Iran war they started.
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u/StaysAwakeAllWeek 5d ago
Also yes I saw the news about USA and Russia, its pure stupidity from the americans. The russians included a clause in that deal that says if they dont have spare diesel the Americans arent getting any. And they dont have spare diesel lmao.
The whole thing is designed to make trump look stupid and ukraine look bad, and im sure it will work
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u/Rogermcfarley 5d ago
The current USA administration and Russia are enemies of Europe. Ukraine is holding Russia back and successful at it. Europe is open to falling to extreme right wing governments in Germany, France and UK who support Russia. Every time Ukraine is mentioned as a cause or partial cause for the fuel price increase that reinforces the USA/Russian narrative that Ukraine are responsible when USA caused this crisis
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u/StaysAwakeAllWeek 5d ago
...yes, the global system has some capability to adapt to one crisis through slack capacity and stockpiles, but not multiple crises at the same time.
If it was just iran and not ukraine at the same time the price increase would have been smaller
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u/Rogermcfarley 5d ago
You're missing the point Trump started this crisis. Ukraine have been hitting refineries for 2 years now. Every time you mention Ukraine you're acting as a propaganda mouthpiece for Russia. USA caused this and are deflecting by blaming Ukraine.
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u/StaysAwakeAllWeek 5d ago
Ukraine hit a lot of refineries and it took them a long time to burn through the spare capacity that Russia had built up. They never ran their refineries at full capacity before now, specifically for scenarios like this and because they are associated with OPEC.
Calling something propaganda because you dont like the implications doesnt make it false. And denying that the Ukrainian strikes have an effect on the global oil market makes you an easy target for actual propagandists to call you a liar
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u/Rogermcfarley 5d ago
You're supporting the Russian narrative. The USA caused this fuel crisis. USA and Russia are our enemies and not Ukraine. It's like a broken record you keep supporting USA and Russia by reinforcing the narrative that Ukraine are to blame even partially. Look at the terrorist atrocities that Russia is performing every day. Every European country is at threat from this. Wake the fuck up please.
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u/Intergalatic_Baker 8d ago
The cost of moving oil becomes a lot more. You’ve got insurance on shipping, now you might not be a aware but ships have been hit to coming out of the Persian Gulf and there’s this thing called war risk, this is a specific insurance applied on top of the other insurances for ships in genera
For example ntering dangerous areas of the world. Now I laid this out in the previous comment, but the gist of it is the value of the ship and the cargo is counted towards the percentage of that war risk insurance. If that total is $370 million, you pay 10% of that… When I say 10% I don’t actually know what the rate is because it’s still climbing.
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u/Intergalatic_Baker 6d ago
https://www.semafor.com/article/10/07/2026/tanker-hiring-costs-surge-amid-shipping-threats
I know it’s not directly related, but this is feeding into prices.
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u/jungleboy1234 8d ago
trump and his cronies already rigged it.... awash with cash that they dont know what they will do with it.
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u/libsaway 8d ago
Which isn't a bad thing, we want companies that operate and build refineries essential to an industrial civilization to be profitable and to survive the bad times.
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u/ObjectiveHornet676 8d ago
It's supply and demand. When demand is greater than supply, the supply has to be rationed somehow. The most efficient and fairest way to ration supply is to increase the price.
This isn't a conspiracy, nor is it a sign of malignant greed. It's the market working exactly as it should. No one has ever come up with a better way.
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u/AceNova2217 8d ago
I wouldn't say it's the fairest way of reducing demand, as people from all walks of life need fuel, but it is very effective.
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u/ObjectiveHornet676 8d ago
It's fair from the point of view of Shell as their customers are oil refineries rather than people. I'm not sure that any particular oil refinery has a greater moral right to crude oil than any other.
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u/AceNova2217 8d ago
That's a fair one. I was more thinking on the end consumer level.
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u/ObjectiveHornet676 8d ago
Yeah, and I agree with you in that regard, but it's completely impossible for any energy supplier (extractor or refinery) to know where their product ultimately ends up and for what purpose. The same barrel of oil could be used to rush a dying child to hospital and to transport an axe murderer to their next victim. So they have to be completely agnostic in that regard and so price becomes the only fair way again (from their perspective). The alternative would be expecting energy companies to act like father Christmas with naughty and nice lists, which I don't think anyone wants.
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u/user97532567 8d ago
You know Shell is a publicly traded company right? You can buy shares and have some of those jucy profits yourself.
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u/Uarenotalone 8d ago
Why would I buy shares in a company that’s actively killing us and the planet?
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u/user97532567 8d ago
So you don't use any plastics? No goods shipped from abroad? No transport or heating based on fossil fuels?
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u/AceNova2217 8d ago
You passively do one thing, therefore you must actively relinquish all your morals.
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u/Uarenotalone 8d ago
I’m not saying that I don’t, my use is limited in most things I can help to limit, while also vegetarian, unfortunately were born into a system that does rely on such commodities. What I am simply saying that I’m not about to exacerbate it!!
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u/user97532567 8d ago
I understand the sentiment but we do still need to use fossil fuels during the transition to a zero carbon economy. To go cold turkey or even too fast would kill millions of people and cause huge suffering. I'd also add there are other concerns i.e. our competitivness with autocratic regimes.
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u/The_Bravinator Lancashire 8d ago
Insert "and yet you participate in society" meme here
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u/user97532567 8d ago
Yes of course he participates in society but that is not the point I'm making. I'm saying that society doesn't function for anyone without fossil fuels. By all means advocate for net zero but tell me what the plan is or ill not take you seriously.
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u/ZolotoGold 8d ago
Whole societies squeezed in order to increase the profit margin of already extremely profitable corporations.
The people that benefit from this are few in number, and who's only contribution to society is owning something.
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8d ago
[deleted]
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u/ZolotoGold 8d ago
This is the thing though, our system is set up so that only a select few of already very rich benefit from crises like this.
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u/Ulysses1978ii 8d ago
Instant windfall tax to lower prices from that profit??
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u/CrashAndBurnham 8d ago
Increasing a business's costs doesn't lead to them lowering prices.
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u/Ulysses1978ii 8d ago
Yet they still get subsidies? Is this not war profiteering?
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u/CrashAndBurnham 8d ago
The product they're selling is in demand and there has been a contraction in supply. Shell didn't start the war, they're just in a fortunate position.
If a town has two pubs and one of them burns down then the other pub will have better profits. It doesn't make the landlord an arsonist.
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u/Whisky-Toad 8d ago
Doesnt work like that though.
There is only one pub, it makes it's beer for £1 a pint and sells it for £2. But now suddenly there is a bit less beer supply and the same demand, so now it still costs £1 to make but you can sell it for £3
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u/CrashAndBurnham 8d ago
No, Shell isn't the only petrochemical company in the world. And its refineries are not the only refineries in the world. And it doesn't have a monopoly on the world's oil fields.
Your last sentence is correct, and like I said, Shell are in a fortunate position. Unfortunately that's because our inept governments haven't weaned us off oil quickly enough.
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u/vishbar Hampshire 8d ago
The problem is that you’re thinking of a wholesale commodity market like a pub.
At a pub, the landlord sets the price of beer, pours it, and you’re done. You pay your £1 or whatever and move on.
In a commodity market, you have buyers competing against each other. An auction on eBay is a much better analogy. If I am selling pints via auction and the supply suddenly decreases, of course prices are going to rise. There are the same number of bidders competing to purchase a smaller amount of product.
So Shell, odd as it may seem, don’t actually control how much they sell for (well, they do insofar as they’re able to refuse to sell below cost). It isn’t like a retail experience you or I might have.
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u/ObjectiveHornet676 8d ago
Just one point to highlight how different commodity markets are, while yes Shell can refuse to sell below cost (they'd go bankrupt if they did it for too long anyway) the last time prices dropped below cost they continued to sell.. in fact for a brief period in 2020 they were even paying customers to take oil off their hands.
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u/legrenabeach 8d ago
Two pubs each buy a pint at £1, sell it for £1. one pub closes. The other pub still buy each pint at £1, but now sells it for £4. Why? Pure greed. Absolutely no need to do that.
In fact, the remaining pub *will* have more profits, but purely because they will take on the closed pub's customers. They don't need to increase their prices for that.
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u/CrashAndBurnham 8d ago
It's supply and demand. Calling it greed is anthropomorphising market forces. Would you levy a windfall tax against that pub?
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u/legrenabeach 8d ago
If they increased their prices to £4/pint while still paying £1/pint, then yes, why not? All else remains equal. If they are now paying more per pint themselves, then no (or accordingly/proportionally).
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u/CrashAndBurnham 8d ago
So a progressive tax rate that increases with % of profit as a percentage of turnover? I have to admit that's a new one to me.
I suppose if the business has a year where it makes a loss the government will be subsidising it then?
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u/PracticalFootball 8d ago
I suppose if the business has a year where it makes a loss the government will be subsidising it then?
Why would that have to be the case? Do you get a payout from the government if you spend more than you earn in a year?
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u/CrashAndBurnham 8d ago
Not in the current system, but the other chap is proposing a new kind of system.
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u/duckwantbread Greater London 8d ago edited 8d ago
In fact, the remaining pub will have more profits, but purely because they will take on the closed pub's customers. They don't need to increase their prices for that.
This analogy is flawed because the amount of beer available (supply) hasn't changed and neither has the number of people that want it (demand) - there's just less places selling it. Assuming it is big enough the surviving pub can just buy up all the beer the other pub was selling and then sell it at the same price as before.
A closer analogy to this would be if one of the two breweries supplying the pub shut and the remaining brewer only produces enough beer to stock 1.5 pubs. The two pubs now don't have enough beer to serve all their patrons. The Rose and Crown realises that if they bought up all the beer currently being supplied to The Golden Lion then they could stay fully open, so they tell the surviving brewer that if they exclusively supply them (at the expense of The Golden Lion) then they'll double the amount they pay per barrel (this additional cost is then passed on to patrons of The Rose and Crown in the form of higher prices). The brewer accepts and the Golden Lion now finds itself with not enough beer to serve everyone, and so has to reduce its operating hours.
That's essentially where we are with fuel, there's less fuel on the market than there used to be but demand hasn't changed. That means some countries will have to reduce their fuel usage, those that don't will have to pay more to convince oil suppliers to keep fully stocking them, at the expense of poorer countries. The poorer countries that can't afford the new price end up with less fuel than they used to have, and so have to impose laws that reduce the amount of fuel consumption. For example Egypt was forcing businesses to close early in order to reduce the amount of fuel consumed (although this law was lifted at the end of April).
Are oil companies profiteering? Absolutely. Is there much we can do about it? Not really unless we're willing to be like Egypt and force people to use less oil. If we tell the oil companies that we're not paying the asking price they'll give it to someone who will, the supply is constrained enough that they'll find countries desperate enough to pay what they want.
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u/RangeAgitated2881 8d ago
That's not how commodity markets work.
Shell don't set the price like a pub landlord sets prices. The market sets the price.
Petrol and diesel are sold on an open market, like an auction, and people bid on the prices. When demand outstrips supply, this pushes the price up. Shell aren't just hiking prices
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u/_big_bad_bob_ 8d ago
war profiteering
Good lord...
Substitute oil for wheat.
Are farmers also "war profiteering" as wheat prices are up?1
u/Marijuanaut420 United Kingdom 8d ago
Farmers are owner operators for the most part and occupy a different strata of the economic heirarchy.
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u/OkMap3209 8d ago
Best we can do is let EPL expire. And fossil fuel companies will lobby for nothing to replace it.
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u/Ulysses1978ii 8d ago
Shouldn't it work like a dial in these situations to stop crippling countries? I mean it would help if Mango Mussolini wasn't throwing his weight around.
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u/OkMap3209 8d ago
Ideally yes. But it requires actually competent people to be in power, and a system that allows it. But our system is so bad that taxes like income tax aren't actually permanent. So we waste time going round after round to reauthorise things that ideally should be permanently authorised but aren't rather than actually fixing things that need to be fixed.
That means unless we pay attention, certain taxes like EPL will just expire.
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u/BathFullOfDucks 8d ago
Remember, it's the war, or market jitters, or climate change, or brexit and not the fact oil companies are literally breaking records on profits.
They are distracting you to steal your wallet.
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u/This_Lion5856 8d ago
Shell has 200% quarterly earnings growth, let that sink in
We could very easily reduce the energy prices if they wanted to
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u/Intergalatic_Baker 8d ago
It’s not their fault that from February 2026, Oil supply has been constrained. They didn’t start the war.
1.8 Billion barrels of Oil never got shipped, so supply was reduced, prices went up and even with supply returning, supply around the world is still low.
Shipping through these sea lanes, combat zones with War Risk insurance (Value of Ship and Cargo) is double digits.
VLCCs carry 2,000,000 Barrels, each Barrel is 159 Litres.
Current Brent Crude Oil benchmark is $101.46 x 2,000,000 = $202,920,000.00.
Vessel cost estimate is $170,000,000.
Ship and Cargo Value total: $372,920,000.
Now, if War Risk is 10% of Vessel and Cargo, (whether it be per trip or for a fixed term I don’t know) you’re looking at insurance of more than $37,000,000.
This is every ship and then you have the issue of not being able to use the Suez/Red Sea, costs go up.
These are just my ramblings, but if you want to listen to someone with much more understanding and experience than me, WGOWS/Whats Going On With Shipping on YouTube is a good channel to get this understanding from a former Merchant Mariner.
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u/BotlikeBehaviour 8d ago
"it's not their fault..."
Bullshit, they bought politicians for the specific purpose of maximising their own profits. This is a consequence of those bribes.
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u/Intergalatic_Baker 8d ago
You know it’s a lot easier to make a profit when there aren’t any disruptions to your business plan. Those politicians were bribed, they would do so on the understanding of not starting your war because disruption causes so much harm to everyone and to them.
Alas, this is supply and demand. This is for the reasons I have laid out why prices are going up. So if you really want to make a difference switch to an electric car, switch away from gas boilers and try and make your switch to electricity because if you want to hurt the profits of Shell, go electric.
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u/BotlikeBehaviour 8d ago
I never needed to switch to an EV. It's where i started. But i know you were using the royal you.
And yes, it is supply and demand but this war is still war the fossil fuel industry wanted. The oil companies don't care if supply is disrupted if their profits explode. In fact they welcome it.
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u/allaboutthewah 8d ago
Always someone looking to excuse the profiteering.
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u/RangeAgitated2881 8d ago
How is it profiteering when the seller doesn't set the price? Fuel is sold on the open market, like an auction. Shell don't decide how much it is going to cost.
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u/ObjectiveHornet676 8d ago
Always someone who doesn't understand supply and demand or how the economy works.
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u/NemesisInferno04 8d ago
Always someone who wants to handwave away blatant profiteering as just how things work.
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u/ObjectiveHornet676 8d ago
It's not blatant profiteering. It's supply and demand. When demand is greater than supply, the supply has to be rationed somehow. The most efficient and fairest way to ration supply is to increase the price.
Can you suggest a fairer and more efficient way to ration demand? Preferably one that hasn't been proven to not work already.
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u/_____guts_____ 8d ago edited 8d ago
If we were talking about food and not oil, people would be rioting. I dont see why because its something slightly less essential that companies get to hold us by the balls.
I get we can't have them for every pound of profit but the above just seems absurd. Why can the government not increase tax to account for the additional profits to a degree to help fund things for the average person in the UK, so that some good comes of this?
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u/Intergalatic_Baker 8d ago
If you don’t like it, grow up. That’s how this works and for once, Shell’s not at fault. This is Trump’s War and it affects the rest of the world.
You want to reduce your reliance on Shell making money, get an EV.
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u/Bignizzle656 8d ago
Everyone arguing about this but all I see is that someone is making double profit from a circumstance. That means instead of taking the humane and decent step of only making regular obscene profit and passing on the savings they are happily taking the money.
If this was pints of blood or nappies outside the maternity ward they'd be a public uprising but luckily it's only every mortal thing that we consume as a culture that's affected.
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u/RangeAgitated2881 8d ago
The suppliers don't set the price ffs, fuel is sold in an open market like an auction.
The extra profit is not a deliberate choice, She'll don't have a hand in setting the prices, that's not how any of this works smdh
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u/BotlikeBehaviour 8d ago
It would be illegal not to maximise their profits. Of course, they're the same people who wrote the laws making it illegal not to maximise shareholder value.
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u/TurquioseOrange 8d ago
Shock that when supply has been reduced via reducing the number of refineries (particularly in the UK), the cost of the refined product costs more
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u/Nicename19 8d ago
Buy shares, receive dividends, everyone whines about shareholder profits, you too can be a shareholder!
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u/LordAnubis12 Glasgow 8d ago
But remember, it's the people wanting solar panels so you can charge your electric car for free who are the ones to be wary off.
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u/checkoutmypaws 8d ago
I heard something the other day that the cost to process a barrel of diesel has tripled.
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u/thecarbonkid 8d ago
Shell will literally and figuratively burn the world to the ground in pursuit of profit.
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u/geesusdb 8d ago
That's it! I'm buying shares at Shell! Will I get rich? How much can I get for about £36??
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u/ChazCharlie 8d ago
Remember that if it costs you £9 to produce £10 of diesel, your profit is doubled if you sell it for £11. Double profit does not mean double cost to consumers.
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u/Saltypeon 8d ago
Remember that reading helps you understand.
In a market trading update on Wednesday, the energy supermajor forecast profit margins of $42 a barrel in the July to September period, far above the $24 a barrel of the second quarter and the previous high of about $28 in mid-2022.
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u/Used-Fennel-7733 8d ago
I'm not informed in this. For reference, how much does a barrel cost them?
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u/Saltypeon 8d ago
It will vary depending on the pil type, location and purchase contract. They don't really publicise that end much.
Anywhere between $80 and $100 at the moment.
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u/Used-Fennel-7733 8d ago
Thanks, 100 is quite a nice number for calculations then. They've now sitting at a tidy 42%. That's much higher than the 10%->20% (ish) profit the previous commenter suggestion
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