The profit BP makes from producing fuel tumbled by more than half in the first quarter as pilots, captains and drivers in the UK and across the world reacted to rising prices by significantly cutting back on their journeys.
As the UK pump price hovers close to record levels, BP's fuel division, which makes petrol, diesel and other propellants for cars, ships and planes, reported a $924m (£570m) profit for the period, significantly down from $2.2bn a year earlier.
This contributed to a 13 per cent decline in BP's first-quarter profits, sending its shares down by 3.7p to 441.3p.
The FTSE 100 giant also suffered from a 6 per cent decline in oil and gas production – excluding its TNK-BP Russian joint venture in Russia – in the first quarter to 2.45 million barrels a day, as it continued to sell off assets to raise money to pay the billions of dollars it owes in fines and compensation for the Gulf of Mexico oil spill.
The declines in BP's output and fuel profits outweighed the benefits of a strong oil price in the first quarter, which averaged $118.60 a barrel during the period, 12 per cent higher than a year ago.
Despite the slump in profit, BP paid out a dividend of 8p a share for the period – the same level as for the previous three months and 14 per cent up on a year earlier.
BP is keen to grow its dividend after reinstating it 15 months ago following a six-month suspension as the company struggled with the financial fall-out of the Gulf of Mexico oil spill.
However, even with the recent hikes, BP's dividend is barely half what it was at its peak before the spill in April 2010, when the group's pay-outs accounted for £1 in every £6 of dividends paid to UK pension funds.
Although BP's main production business benefited from the high oil prices, profit margins at the company's fuel operation suffered because it was unable to pass on the full cost of the increase to customers.
This is partly because any price rise will reduce demand, especially when customers are already strapped for cash, but also because the emergence of so-called super-refineries in Asia have increased competition.
With oil prices set to remain high, austerity likely to continue and competition intense, analysts said that BP's refining business would remain under pressure for the foreseeable future.
Furthermore, they were also concerned that BP would report further production declines in the second quarter of the year, as it continued selling off oilfields.
BP's profit slump contrasted with Shell's announcement last week of an 11 per cent jump in profits during the same period.
Meanwhile, ConocoPhillips, the US oil company, reported a 1 per cent decline in profit and ExxonMobil an 11 per cent drop.Reuse content