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Oil giant Shell to reveal record profits of more than £30bn as households and businesses grapple with skyrocketing energy bills
Booming: Shell is expected to say annual profit more than doubled
Oil giant Shell will reveal record profits of more than £30bn as households and businesses grapple with skyrocketing energy bills.
The corporate giant is expected to say this week that annual profits have more than doubled as the war in Ukraine curtailed supplies from Russia, sending the price of gas and electricity skyrocketing.
The FTSE100 giant and its arch-rival BP have faced mounting criticism for cashing in. BP CEO Bernard Looney famously described his company as an “ATM” because of the amount of money it has made from inflated prices.
But since he made those comments in 2021 – three months before the invasion of Ukraine – BP and Shell’s profits have continued to escalate rapidly.
In May, Rishi Sunak imposed a windfall tax on oil and gas producers operating in the UK and the North Sea. The levy has been increased from 25 percent to 35 percent in the Autumn Statement and extended until 2028 – three years longer than originally planned.
It is set to raise £40 billion over six years. Critics claim that the windfall tax deters investments in the North Sea.
But the size of profits at both Shell and BP, to be reported next month, is likely to lead to calls for companies to pay more. Shell expects to pay UK and European Union windfall taxes of around £1.6bn – compared to annual profits of around £31bn, expected to be revealed on Thursday by new CEO Wael Sawan.
The windfall tax contributions will also be dwarfed by the £20bn paid back to investors in dividends and share buybacks last year alone.
BP has also had a great year and is expected to reveal that it more than doubled its profits to £23 billion. It expects to pay around £645 million in windfall taxes in the UK and Europe in 2022.
Wholesale gas prices have fallen in recent weeks, but remain at a high level. An energy support package for households expires in March.
Small businesses also face an abyss in April as the government’s energy support scheme is scaled back.
Tina McKenzie, policy chair of the Federation of Small Businesses, said it is important that any savings from falling wholesale prices are passed on to energy suppliers as soon as possible. “With the government’s energy discount tapering off in April, small businesses need more support to get through this cost crunch,” she added.
Groups representing more than 100,000 UK businesses recently accused ministers of taking a ‘scattergun’ approach to prop up businesses with their energy costs, fearing the high bills will force many to close this year.
They want companies to be able to renegotiate contracts that were agreed upon when wholesale gas prices spiked last summer.