The news has sparked calls for higher taxes on the oil sector
As the UK battles with a cost of living crisis, the world’s five biggest oil companies — BP, Shell, Chevron, Total, ExxonMobil — have raked in combined profits of £50bn this quarter.
The boom is due to rising energy prices, driven in part by the war in Ukraine.
As costs continue to increase, research firm Cornwall Insight has predicted that UK households will see average annual bills reach more than £3,600 this winter.
To put that in context, the cap on annual energy bills was just £1,400 in October last year. Cornwall Insight has also predicted that the figure will remain above £3,400 throughout 2023.
As people across the UK struggle to cope with the hiked up costs, energy companies will be lining the pockets of their shareholders. BP, for example, plans to dish out £4bn to its shareholders after seeing its profits triple.
The news has provoked calls for a higher windfall tax on oil companies from multiple MPs across Labour, the Liberal Democrats and the Green party, as well as environmental campaigners.
“While households are being plunged into poverty with knock-on impacts for the whole economy, fossil fuel companies are laughing all the way to the bank. The government is failing the UK and the climate in its hour of need,” reads a statement by Doug Parr, the chief scientist for Greenpeace UK.
The UK government has not only failed to impose a windfall tax, but has offered tax breaks to oil companies to help them invest in drilling for more oil, further fuelling criticism from the opposition.
“People are worried sick about energy prices rising again in the autumn, but yet again we see eye-watering profits for oil and gas producers,” said Rachel Reeves, Labour’s shadow chancellor, in a statement. “Labour argued for months for a windfall tax on these companies to help bring bills down, but when the Tories finally U-turned they decided to hand billions of pounds back to producers in tax breaks. That is totally wrong.”
In an interview with LBC radio, Jacob Rees-Mogg, the government’s Brexit opportunities minister, shed light on the government position. “I’m not in favour of windfall taxes,” he said. “The energy industry is enormously cyclical. You need to have a profitable oil sector so it can invest in extracting energy.”
We know that the cost of living crisis is hitting lower income households and women the hardest. What do you think — should oil companies’ profits be kept in check?