From the Guardian · · 2m
While Australians struggle, oil firms rake in record profits
Ampol and Viva Energy are posting massive earnings by raising fuel margins, not selling more, as the RBA stays silent on corporate profiteering.
In brief
Ampol and Viva Energy are posting massive earnings by raising fuel margins, not selling more, as the RBA stays silent on corporate profiteering. Australian oil refiners Ampol and Viva Energy are posting record profits by widening margins on fuel, not increasing sales, while households face a cost-of-living crisis and…
The paradox of the crisis
Australians face a cost-of-living crisis while oil companies report record profits. The overseers of the economy defend the status quo to ensure company profits keep rising.
Ampol's margin explosion
Ampol reported third-quarter operating profit growth reflecting strength in its integrated supply chain to capture benefits from prevailing market conditions. The margin at Lytton refinery was US$23.92, more than double the year-earlier US$10.62.
“reflects the strength of the integrated supply chain to capture the benefits from prevailing market conditions”
Geopolitical tensions help Ampol
Ampol noted that escalation of geopolitical tensions in the Middle East and ongoing constraints in fuel supply continue to be net favourable for its integrated supply chain.
“escalation of geopolitical tensions in the Middle East in recent weeks and ongoing constraints in supply of fuel products … continue to be net favourable for Ampol's integrated supply chain”
Ampol's stunning profit surge
Ampol's net profit in the first half of this year was up 376 percent, rising from $180.2m to $857.2m. This growth came not from selling more fuel but from increasing margins.
Viva Energy's margin gains
Viva Energy, which owns the Geelong oil refinery and supplies Shell-branded fuel, announced strong first half earnings with operating profit up 154 percent from $304.9m to $774.4m.
Volume stayed flat at Viva
Viva Energy's massive profit increase did not come from selling more fuel. The volume of fuel it sold only rose 1.3 percent, showing profits came from margin expansion.
The RBA stays silent
Deputy governor Andrew Hauser was asked whether companies needed to adjust to lower profitability to maintain social licence. He suggested companies are conscious of social licence but did not address the current problem.
Inpex pays no tax
Japanese gas company Inpex reported full-year profit expected to be a record high of ¥510.0 billion, supported mainly by higher sales prices at Ichthys LNG. It pays zero dollars in tax and royalties to Australia.
“full-year profit is expected to be a record high ¥510.0 billion, supported mainly by higher sales prices and stable operations at Ichthys LNG”
The social licence illusion
Companies spend marketing budgets making themselves look like good corporate citizens rather than actually being so. They also spend heavily lobbying governments to ensure concerns about social licence are overlooked.
The pattern will repeat
When AI firms make massive profits that increase inflation and pay little tax, governments and central banks will likely stay silent while households face higher interest rates or cuts to services.
What to remember
Australian oil refiners Ampol and Viva Energy are posting record profits by widening margins on fuel, not increasing sales, while households face a cost-of-living crisis and the Reserve Bank says nothing.
