Critics are slamming BP for recording massive profits while Americans are being gouged at the pump. Following a spike in oil and gas prices, the energy giant BP announced its greatest quarterly profit in 14 years. Between April and June, the business’s underlying profits reached $8.45 billion (£6.9 billion). When compared to the same period last year, this figure is more than triple. The news comes at a time when the average household’s annual energy costs are anticipated to exceed £3,600.
The record profits have sparked calls for the government to tax businesses more heavily to assist families with growing costs. BP’s profits in the 2nd quarter were the second highest in the company’s history. BP is not the only company benefiting from high oil and gas prices. Similar announcements come from a slew of other companies like Equinor, Shell, British Gas owner Centrica, and TotalEnergies.
Energy provider Ecotricity’s founder, Dale Vince, stated that BP was “holding a shedload of money that is coming from hard-pressed bill-payers in our country” and that he thought it was time to raise taxes on the earnings of oil and gas firms.
“Clearly there are exceptional windfall profits in the oil and gas sector, and clearly there’s a problem in the energy market, and we should fix one with the other,” he said.
A higher windfall tax on oil and gas business profits was also demanded by activist groups Greenpeace and Friends of the Earth, as well as Labour and the Liberal Democrats.
Nick Butler, an ex-vice president of BP, explained that the business was “very sensitive to the reputational problems of making money at this level.” “You have Europe as a whole now cutting back gas use by 15% immediately, which is not happening here, and actually going out around the world to secure as much of the supply as they possibly can through the winter,” he said.
The government wants to help families with their energy bills. People were given a £400 discount and a firm promise from the ministers that oil and gas companies would be required to pay an additional 25% of profits made in the UK.
This new, higher tax applies from 26 May and to profits made in the United Kingdom. It represents one-tenth of all oil and gas production for BP. Most of BP’s profits between April and June will not be subject to the levy. The Energy Profits Levy, sometimes known as the windfall tax, is estimated to raise roughly £5 billion in its first year, according to the Treasury.
A windfall tax opposers claim it might harm pension funds with investments in energy companies. Pension funds are invested throughout different countries and businesses, so it is unlikely that a tax in one area will have a significant impact.
The war in Ukraine has caused a rapid spike in oil and gas prices, which has contributed to the enormous increase in profits for businesses. Following the invasion, Russia has recently cut back on supplies to Europe, and there are rising concerns that it may turn off the taps altogether.