Big oil quarterly profits hit £50bn as UK braces for even higher energy bills | BP

Windfall profits of nearly £50billion shared by the world’s five biggest oil companies have sparked a chorus of calls for higher taxes on the sector as UK households are told to brace for annual energy bills averages over £3,600 this winter.

Britain’s BP has been accused of ‘profiting unfettered’ after saying on Tuesday that underlying profits tripled to $8.5bn (£6.9bn) between April and June, thanks to prices high oil. It was its biggest quarterly profit in 14 years and BP said it would pay out almost £4billion to shareholders as a result.

Prices soared amid fears over energy supplies caused in part by Russia’s invasion of Ukraine.

Oil profit table

Oil companies in the UK and beyond have recorded booming profits in recent months on rising energy prices as households around the world struggle to cope with soaring bills sharply.

Rachel Reeves, Labour’s shadow chancellor, said the ‘tempting profits’ showed the government was ‘totally wrong’ for giving major tax breaks to oil companies.

A host of Labor, Liberal Democrat and Green MPs and environmental campaigners called for a higher windfall tax on oil companies.

Fuel price table

The second quarter profit windfall included a record profit of $11.5 billion for BP rival Shell in the FTSE 100, record profits of $17.6 billion and $11.6 billion respectively for ExxonMobil and Chevron in the United States, plus $9.8 billion for Total in France. In the first six months of the year, the companies made combined adjusted profits of nearly $100 billion.

As the Russian invasion continues, research firm Cornwall Insight has predicted that the energy price cap on annual bills in Britain will rise to £3,615 a year from January. It was an increase from its previous estimate of £3,363 made last month.

The cap, which is set quarterly by energy sector regulator Ofgem, was £1,400 a year as recently as October last year. Cornwall expects the cap to remain above £3,400 for the whole of 2023, putting more pressure on household finances.

“People will be confused by the latest earnings reports from BP,” said Sharon Graham, general secretary of the Unite union. “The UK economy is not working for workers and their families. Britain’s real crisis is not rising prices, it is an epidemic of runaway profits.

table of fuel price caps

Further energy price hikes in the coming months will also put further pressure on the new UK Prime Minister, once Conservative Party members choose between Truss and former Chancellor Rishi Sunak by 5 september.

BP chief executive Bernard Looney, whose total salary in 2021 reached £4.5million, in February described BP as a “slot machine”, even before the invasion of Ukraine by the Russia does not raise prices yet. The company’s profit between April and June was the second highest in BP history and capped a period that will be remembered as one of the most profitable quarters in the history of the oil industry.

In May, the British government responded belatedly to political pressure amid soaring energy prices by imposing a one-off £5 billion tax on oil companies’ “windfall profits”.

Reeves criticized the government for simultaneously giving oil companies 80% tax breaks for new investments, allowing them to lower their tax bills by drilling for more oil. She said Labor would instead use the extra money from the scrapping of tax breaks for a “green energy sprint”, as well as more home insulation to reduce energy use.

“People are worried about the further rise in energy prices in the fall, but again we’re seeing eye-popping profits for oil and gas producers,” she said Tuesday.

“Labour argued for months for a windfall tax on these businesses to cut bills, but when the Tories finally did an about face they decided to return billions of pounds to producers in the form of tax breaks. It is totally false.

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Environmental campaign groups Greenpeace and Friends of the Earth have also called for a much stricter levy on energy profits.

Doug Parr, chief scientist at Greenpeace UK, said: ‘As households are pushed into poverty with repercussions across the economy, fossil fuel companies are laughing to the bank. The government is failing the UK and the climate in this hour of need.

“The government needs to impose a windfall tax on these monster profits and stop giving corporations massive tax breaks on destructive new fossil fuel investments.”

Jacob Rees-Mogg, the government’s Brexit opportunities minister, told LBC radio: “I’m not in favor of windfall taxes. The energy industry is extremely cyclical. You need to have a profitable oil sector so that it can invest in energy extraction.

Looney acknowledged the difficulties encountered by households during a call with analysts. Energy affordability is an “acute issue for many,” he said.

“We all have to recognize that this is a very, very difficult place for people, not just in the UK but also around the world,” he said. “We understand that. We understood.”

But he also said BP’s oil and gas operation was “doing what it was supposed to do: profit from rising prices”. BP also said it benefited from massive growth in profit margins at its refineries, which produce products such as gasoline, diesel and jet fuel, all of which contributed to rapid inflation in major economies.

Environmental groups said windfall tax revenues should be invested in energy-saving measures such as insulating homes, which would help tackle the climate crisis and reduce dependence on electricity. despotic oil and gas producing regimes such as Russia.

A Treasury spokesperson declined to comment on individual taxpayers, but said the £5billion Energy Profits Levy “would help pay for our £37billion support package, which includes direct payments worth at least £1,200 to the 8 million most vulnerable families, a record reduction in fuel duty. , and a reduction in National Insurance worth up to £330 a year for the typical employee”.

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