BP makes the most money it has in 14 years as energy prices rise sharply, Oil and gas prices have surged, resulting in BP’s highest quarterly profit in 14 years.
Between April and June, the energy giant produced $8.45 billion (£6.9 billion) in underlying earnings, more than three times what it did in the same period the previous year.
A typical household’s annual energy costs are expected to rise to around £3,600 this winter.
There have been calls because of the record profits for the government to raise taxes on corporations even more, to help families deal with rising expenses.
BP’s second-quarter profits were the company’s second-highest in its history.
Firms like Shell, Equinor, and British Gas owner Centrica have been reaping the advantages of rising gas and oil prices, and this news is the latest in a long line of profit declarations.
Ecotricity founder Dale Vince claimed BP was “keeping a shedload of money that is coming from hard-pressed bill-payers in our country,” adding that he believed it was time to raise taxes on oil and gas earnings.
As he stated on BBC’s Today show, “There is an issue in the energy market that we should repair together with the unusual windfall gains” in the oil and gas business.
A more robust windfall tax on oil and gas company profits was also called for by campaign groups Greenpeace and Friends of the Earth, the Labour Party, and the Liberal Democrats.
Professor Nick Butler, a former BP vice president, believes that the energy giant is “extremely sensitive to the reputational challenges of making money at this level”.
He told the BBC there was a “real case” for the government calling together the industry “to find a plan to get us through the winter”.
EU gas use has been reduced by 15% “immediately,” which is not occurring here and “actually going out throughout the world to secure as much supply through winter,” he added. “You have Europe now cutting back gas use by 15% instantly,” he said.
The government has taken several steps to assist citizens with their energy bills, including a £400 discount. In response to political pressure, officials announced in May that oil and gas companies would be required to pay an additional 25% of profits made in the United Kingdom.
The tax begins to take effect on May 26 for oil and gas corporations, whose operations in the UK make up only a tiny portion of their total revenue. Oil and gas output from this region accounts for 10% of BP’s total.
Therefore, most of BP’s revenues produced between April and June will not be subject to a charge.
When asked about “individual taxpayers,” Treasury officials replied they couldn’t answer. However, they did say they expected the Energy Profits Levy to raise $5 billion in its first year.
It is argued that a windfall tax would hurt pension funds invested in energy companies.
As a result, a tax on one sector will have little impact on pension funds, which are invested in various countries and businesses.
What’s boosting revenue?
As a result of the fighting in Ukraine, oil, and gas prices have increased dramatically, which has helped drive up revenues for businesses enormously.
The Russian government has cut down supplies to Europe months after the invasion, and there are rising concerns that it will turn off the taps completely.
Because of the potential for gas supply issues, wholesale prices have risen dramatically, causing energy companies to pass along the increased costs to consumers, resulting in record-high home energy bills.
As a result of rising oil costs, gas and diesel prices have recently reached record highs at the pump, although prices have begun to dip slightly.
At this point in time,” Dr. Craig Lowrey, lead consultant at Cornwall Insight, said on the BBC’s Today program, “energy bills look like they’re going to stay high for a long period of time.”
“This is not going to be compensated” by the current government assistance, he claimed.
According to BP, refining margins and oil trading were the primary drivers of the company’s record profits. As a result of the increased profits, the company declared that it would increase shareholder dividends by 10% and purchase back shares.
Bernard Looney, the company’s CEO, referred to the energy market as a “cash machine” last year.
He said that a “trilemma” had been solved with “safe, economical, and lower carbon energy” provided by the company’s employees on Tuesday.
During a conference call, he said, “In terms of the expense of living, we all have to recognize that it’s a very, very challenging place for people.”
“That’s what we get. We get it.” “Our company’s personnel understand it and want to assist.”
According to Mr. Looney, BP is “backing Britain” by investing an estimated £18 billion in the UK over the next decade.
As a result of the conflict in Ukraine, the firm took a $19.9 billion blow to its half-year earnings after selling off nearly 20% of its interest in Russian oil major Rosneft.
Richard Hunter, head of markets at online investment firm Interactive Investor, said BP had “already made some solid progress” in recouping the financial pain of its Russian withdrawal, adding that BP’s latest results were an “early indicator of the company’s potential to heal such harm.
It’s a striking difference, yet one that must exist. There is a direct correlation between high oil and gas prices and the profits of the firms that sell them.
For the three months from April to June, BP’s profits tripled and are the second-highest in the corporation’s long history.
During the next three months, the business plans on paying out an additional £3.6 billion in dividends to shareholders. Most pension funds are among the company’s shareholders. However, these figures contrast with recent forecasts that the average annual energy bill will be above £3,600.
Both BP and Shell recently posted record earnings, and company insiders note that a few years ago, neither company was offered a subsidy to offset its losses.
International oil and gas prices have skyrocketed due to the spike in global demand following Covid, which has been worsened by efforts to remove Russia from the international energy market.