BP benefits from soaring oil prices

Oil giant BP has reported a 23% increase in half-yearly profits boosted by soaring oil costs.

Replacement cost profit after tax was £3.4 billion ($6.85 billion) during the second quarter of 2008, compared with $6.5 billion during the same period last year.

Profits would have been even higher without changes imposed by accounting rules which meant that the oil giant had to re-calculate the value of its UK gas contracts. This made a difference of nearly $2.1 billion in the second quarter.

However, the results have caused outrage amongst unions and motorists who have accused BP of cashing in on rising energy prices and are calling for a windfall tax on their profits to help those struggling to deal with higher energy costs. Defending the results, BP said the rise in profits was a legitimate reward for its efforts.

Since the start of the year, petrol prices have rocketed, increasing from an average of 102.8p per litre in January to 118.2p at the end of last month. Meanwhile, diesel prices have risen 22% over the same period.

BP is in the middle of a dispute with its Russian shareholders in its Moscow-based joint venture, TNK-BP. BP said it continued to work to resolve these matters but added it is not yet possible to predict the outcome.

It is also believed that fellow oil company, Shell, will also post high results later this week.

Story link: BP benefits from soaring oil prices