The Oil Boom and Bumper Profits

 BP and Shell are on course to make a combined profit of almost £40bn this year from the rocketing price of petrol and gas. Gas prices increased ninefold from a year earlier in the run-up to Christmas and remain five times higher than the level in January 2020. Oil prices have jumped from below $40 a barrel in the first lockdown to more than $80 a barrel. Several oil industry analysts have forecast oil prices continuing to rise above $100 a barrel this year, pushing oil company profits even higher.

Anti-poverty campaigners described the profits of oil producers as “obscene”.

BP, which extracts oil in the North Sea, Alaska and the Gulf of Mexico, is this week expected to announce annual pre-tax profits in 2021 of more than £12bn, before signalling that it is on course to make a £15.5bn profit in 2022.

Last week Shell reported annual profits of £14.3bn, which analysts believe will grow to £23.6bn by the end of its financial year in June.

Shell and BP have channelled £147bn to shareholders via dividends and share buybacks over the past decade, with rival North Sea producers and the big six energy suppliers contributing another £47bn. BP is expected to use its stronger cashflows to hand a larger dividend to shareholders and buyback shares to improve its value on the stock market.

Danni Hewson, a financial analyst at the stockbroker AJ Bell, said, “It’s hard not to paint big energy companies as villains when they and their shareholders are profiting from the rising prices that are making life miserable for many hardworking people. Both businesses have made huge pledges but the proportion of spend they apportion to green projects is still woefully tiny. Such a gesture would take the sting out of their current good fortune, while benefiting both shareholders and the general public.”

Tessa Khan, an international climate change and human rights lawyer and founder of campaign group Uplift, said it was “obscene” Shell’s shareholders were getting rich at a time when people face “real hardship”.

“In 2020, not only did Shell not pay any tax in the UK, the only country in which it operates where it didn’t, Shell picked up nearly £100m from taxpayers in rebates."

£40bn profits for BP and Shell fuel calls for windfall tax on energy firms | Cost of living crisis | The Guardian