I usually want the P tags on the same line as the text, but occasionally I want it on separate lines (the default), and I've set up BBEdit to do it either way...
I didn't do anything in Terminal as Patrick describes, so if I use the contextual menu "Insert Tag" and choose "p", it puts the paragraph tags on separate lines.
However, I also created a Clipping called "p", and assigned it a keyboard shortcut of control-option-command-P. (It shows up as a cap "P" in the Clippings menu for some reason, although I don't actually hold down the shift key.) This clipping surrounds any selected text with paragraph tags on the same line as the text:
<p>#selectionorinsertion#</p>
#inline#
I also created a similar clipping called "p_class" that also puts the paragraph tags on the same line, plus a class placeholder:
<p class="#placeholderstart#class#placeholderend#">#selectionorplaceholder content#</p>
#inline#
...and another called "p_id" that puts the paragraph tags on the same line, plus an ID placeholder:
This way, depending on my overall formatting, I have a nice choice of how I want the P tags to appear.