Shell has learnt from its painful episode

The company is buying back its own shares at a rate of $3.5bn a quarter.

Paul White - UK Industries / Alamy

The usual suspects were quick to complain about the results from Shell yesterday. “Climate scientists have warned us that this new normal will spell the end of human civilisation by 2100. It’s time for destruction to stop raising billions in profit," according to Robin Wells of Fossil Free London.

The executives and (us) shareholders have long since got used to this sort of thing, and the timing was not exactly helpful to the protesters, as Shell’s quarterly profit to June fell from $6.3bn to $4.3bn.

Perhaps he would rather see the profits fall further or faster, or to see the company change course.

Unfortunately, he has a template for this, and it is not helpful to the cause. BP led the charge for renewables, and has discovered that it ain’t easy being green. Its investments in renewables have yielded far less than it hoped. Its share price has been left behind by the other two oil majors, Exxon and Chevron, to the point that it is widely viewed as a takeover target.

Shell’s previous management also got into a muddle during the covid crisis, and this week’s results demonstrate that they have learned from that painful episode. The company is buying back its own shares at a rate of $3.5bn a quarter, making a total of more than $45bn in the last three years, alongside a slowly rising dividend.

Shell, as the protesters have spotted, is an oil company. The industry has learned the hard way that the skills honed over the last half century do not translate to planting and running offshore wind turbines. Harnessing the wind is a tough business where even the specialists find it hard to make money. Shares in Orsted, the market leader, have fallen by three-quarters from their peak four years ago.

That $45bn which Shell might have sunk in the sea is far better employed by other investors, who can judge where their capital is expected to produce the best return. Besides, Mr Wells and his fellow protestors should have a care. Shell is an important UK company, after the dual structure with The Netherlands was scrapped in favour of London some years ago. Should the protests become more than a minor irritant, Shell’s board could decide to move the domicile to America, along with the jobs that any HQ generates, where they could concentrate on running the business with fewer distractions. They might end up pumping more oil and gas rather than less, too.