Nobody loves Big Oil. Filling up the car is sometimes described as a distress purchase, meaning that you want to escape as soon as possible, and investors seem to have a similar desire to escape from the shares of BP and Royal Dutch Shell. Last week the unpopular pair produced results to show how profitably they can live with $50 oil, and their shares merely recouped the previous few days’ losses.

The green lobby argues that the oil age is over, and that far-sighted investors should help themselves as well as the planet by getting out of a dying industry. By appealing to self-interest as well as do-gooding, environmental groups have persuaded some institutions to throw out their oil shares on principle, regardless of valuation.

Both stocks now yield over 7 per cent, implying that the green argument that dividends are unsustainable in the long term, and that the shares should be rated as wasting assets, seems to be gaining traction. It may even be true that “peak oil” will mean peak demand, rather than the previous use of the term to describe peak supply. Then we were told (sometimes by the same environmental groups) that the stuff was running out. Today’s best guess is that any peak is some years away, and decline likely to be slow. Oil will run the world for many decades yet.

The argument against oil stocks mirrors that against the tobacco companies, when the combination of relentlessly rising taxation and public health education appeared to be an existential threat to the industry. Institutions were lobbied to sell their holdings, to save their investors from future losses and to feel better about themselves. The industry consolidated, profitability rose, and new entrants were discouraged. Results last week showed Imperial Brands in better health than its customers. Oh, and Imps’ share price has multiplied nine-fold since 2000.

Both BP (with the Macondo disaster) and Shell (with the overpriced purchase of BG) have demonstrated that there’s a deal of ruin in an oil company. Both are now earning their dividends at today’s crude price. They may never be loved, any more than Big Tobacco is loved, but with yields like these, us unemotional investors can live with a little unpopularity.

Oggi e sciopero*

“The problem,” says Carlo Calenda, “is that Alitalia is too small.” No, the problem, dear economic development minister, is that the staff believe that there’s always more Italian government money to keep it (and them) flying. Here, have another €600m, and please don’t call it nationalisation. It’s a “bridging loan” – to a business in administration.

You can hardly blame the 12,000 employees who rejected the latest union-approved attempt to cut costs. In previous crises the financiers have always blinked first. It is only three years since the last rescue, by Etihad of the United Arab Emirates, and even now it seems that the supply of other state-backed airlines waiting in the wings is far from exhausted.

Alitalia has long given the impression to passengers that it is run primarily for the benefit of the workforce, which is why it has been murdered in the marketplace. Ryanair and the other low-cost airlines have captured nearly half the Italian market from scratch. This may have done wonders for the Italian tourist industry, but it’s a demonstration that size has little to do with it, whatever Mr Calenda says.

It’s all pretty simple, really

Ever wondered how a bank chairman is chosen? Standard Chartered’s accounts thoughtfully include a timeline leading to Jose Vinals’ appointment last December. The process is stately, to say the least, since Sir John Peace had announced his intention to go in January 2015, and it took until that December for senior independent director Naguib Kheraj to assemble a short list.

So slow was the process that a “refreshed” list was needed in early 2016, and Mr Vinals started to emerge from the pack. After countless meetings over the summer with and without him, he was offered the job in July. Mr Kheraj was made deputy chairman, doubtless in return for all that hard work.

*Today a strike

 

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