Browne buys out his critics

BP never really expected it to be like this. When it made its big acquisitions in the US at the turn of the millennium, the assets were bought on the basis of a $10 to $15-a-barrel oil price.

Since then it has moved its average expected price for oil from $16 to $20 and now chief executive Lord Browne is working on the basis of $30 a barrel with the price spiking even higher when there is a supply problem.

This is throwing off enormous amounts of cash. At the consumer level, the sight of big oil rustling up third- quarter profits of £2.15bn and heading for £9.1bn over the full year is hard to take.

But BP pertinently points out that whereas the market price of oil has risen 65% this year, the pump price is up just 10%. As we should know 75% of what we pay goes to Brown at the Treasury, rather than Lord Browne, the 'people's peer'.

And tax rules on transfer pricing, competition regulations and low profit returns on the forecourts make the petrol price issue more complicated than it looks.

Investors, on the other hand, should be laughing. So far this year BP has pumped £3bn back into the stock market through its share buyback, the largest in British corporate history. This has been useful for the Footsie, in which BP is an important component, during a period of overall weakness.

Private shareholders would almost certainly prefer to see a better dividend. In dollar terms the payout has been going up by 8.8%, but in sterling terms it has actually fallen by 2.2%. This is unfair at a time when many investors are looking for income.

The BP board should consider a more progressive sterling dividend policy - share buybacks are not repaying private investor loyalty.

Green shoots

GORDON Brown likes to boast that he is the Chancellor who brought stability to the British economy. So he is unlikely to be best pleased by a groundbreaking study just completed for the Bank of England by economist Luca Benati.

The research finds that stability, as measured by inflation and growth, began not with the decision to make the Bank of England independent in May 1997, but in 1992 when the luckless Norman Lamont was still Chancellor.

In the aftermath of Britain's ejection from the exchange rate mechanism in September 1992, the Treasury, then under the stewardship of Lord Burns, created a policy mechanism in the shape of inflation targeting.

It was from this small beginning that the whole apparatus of the Inflation Report, the Monetary Policy Committee and an independent Bank eventually were born.

Benati divides the UK's post-World War II economic history into segments. First came the Bretton Woods regime of fixed rates. This was followed by a period of floating rates coupled with wage and price controls.

Thatcher introduced monetary targeting which in the late 1990s was followed by the ERM. Simulations comparing these periods to the post-1992 regime found that the latter 'has been significantly more stable that the previous era'.

Indeed, it was more stable on three measures of inflation, for growth and for the relationship between prices and unemployment known as the Phillips curve.

The green shoots of the Lamont era were there after all. But they were so deeply buried that they are only now being recognised.

Leighton loose

ALLAN Leighton is not slimming down his jobs portfolio for nothing. The timing of his departure from lastminute.com, Cannons and Dyson and of Archie Norman's decision to leave the Commons appears to be a coincidence. But it would not be surprising if these two former Asda executives were plotting their next move after seven years apart.

Leighton is not short of jobs with Royal Mail, Bhs, Selfridges and BSkyB to think about. In the coming weeks he will be making himself scarce in North America looking at Galen Weston's supermarket operations there. But playing second fiddle in a family-controlled group is not Leighton's ideal.

He, like Norman, would clearly relish a crack at J Sainsbury were the opportunity to come along. The main obstacle is convincing the Sainsbury family. That chance may not come until after Christmas when there is better evidence of Justin King's efforts at a turnaround.

There is some scepticism on whether Sainsbury can compete as a superstores group or whether it needs to scale back and become a supermarket group with the best own-brand products, something it pioneered.

Do not expect speculation about Sainsbury's future to die any time soon.