LONDON (Parliament Politics Magazine) – After oil and gas prices skyrocketed, BP’s profits for the first three months of the year more than doubled.
The energy behemoth posted an underlying profit of $6.2 billion (£4.9 billion), up from $2.6 billion in the previous year and well ahead of estimates.
The spike was attributed to extraordinary oil and gas trading, by BP.
Growing profits have sparked proposals for a one-off windfall tax on energy providers to aid households in the UK, struggling to keep up with growing bills.
This form of charge is aimed at companies that have been fortunate enough to profit from something they were not deemed responsible for, such as a windfall.
A dramatic spike in oil prices has fueled BP’s profits, which was first fueled by rising demand as economies reopened after the Covid lockdowns. The energy market, according to BP Chief Bernard Looney, is “a cash machine.”
Oil prices soared much higher after the war in Ukraine broke out and western countries slapped sanctions on Russia as a result of its invasion. Russia is the world’s second-largest crude oil exporter and the world’s largest natural gas exporter.
Inflation in the United Kingdom is at its highest level in 30 years, because of rising oil and gas costs, which have pushed up fuel prices and the cost of domestic electricity.
BP’s profits, which exceeded the expectations of the analysts of $4.5 billion, reinforce the case that they had been making, which was that, with so many people struggling to pay their energy bills, they should have a windfall tax on oil and gas companies in the North Sea who had made more profit than they had been expecting, Labour leader Sir Keir Starmer told the BBC.
Italy has announced that it will raise its tax on windfall profits of energy companies from 10% to 25%, although the UK government opposes such a charge.
A windfall tax, according to PM Boris Johnson, would stifle investment and raise oil prices in the long run.
If a windfall tax was imposed on energy firms, you were discouraging them from making investments that they wanted to see, which would keep energy prices lower for everyone in the end, he told ITV.
Energy corporations should pay a bit extra to help the most needy, according to Ed Davey, Liberal Democrat Leader.
The Conservative government’s refusal to impose a windfall tax on oil firms’ mega profits was becoming increasingly difficult to defend, he said. BP was making record profits as millions of people were struggling to pay the bills.
Chancellor Rishi Sunak has previously stated that if firms do not invest enough in the UK’s energy supply, he will consider a windfall tax policy.
BP revealed plans to invest £18 billion in green and fossil fuel businesses in the United Kingdom by the end of the decade on Tuesday.
However, it also announced that it would buy back additional $2.5 billion in shares and keep dividends at 5.46 cents per share.
BP intends to pay £1 billion in taxes on its North Sea profits in 2022, on top of the £250 million it has spent in other taxes in the UK in recent years.
They were supporting Britain, Mr Looney said. It had been their home for more than 110 years, and they had invested in North Sea oil and gas for more than 50.
They were totally committed to the UK’s energy transformation, providing reliable domestic energy while also focused on achieving net zero.
