The oil giant BP has reported a record profit of £6.4bn, and among the gloom and carnage of the stock markets the company’s share price has soared dramatically.
In the face of renewed calls for a windfall tax on oil companies, a pundit on Radio 4’s World at One news programme patiently explained that the markets were not just reacting to the size of the profit; when oil prices are volatile, such companies will inevitably make large profits or losses. What made BP’s financial results special was that they showed that managers had controlled costs more effectively than any of their competitors. During a recession, it is this ability to operate efficiently that particularly distinguishes the winners from the losers.
Contrast this piece of good news with a potentially far more important story that received hardly any media coverage at all. Continue reading »
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