Oil giant Shell set to unveil record profits of more than £30billion as households and businesses grapple with sky-high energy bills
Booming: Shell is set to announce that its annual profit has more than doubled
Oil giant Shell is set to unveil record profits of more than £30billion as households and businesses grapple with sky-high energy bills.
The corporate giant is expected to report this week that annual profit has more than doubled as war in Ukraine has restricted supplies from Russia, sending gas and electricity prices skyrocketing.
The FTSE100 giant and its big rival BP have come under increasing criticism for cashing in. BP chief executive Bernard Looney described his company as resembling an ‘cash machine’ because of the amount of money it has earned from high prices.
But, since he made those comments in 2021 – three months before the invasion of Ukraine – the profits made by BP and Shell have continued to rise rapidly.
In May, Rishi Sunak imposed a windfall tax on oil and gas producers operating in the UK and the North Sea. The levy was increased in the Fall Statement from 25% to 35% and extended until 2028, three years longer than originally planned.
It is set to raise £40bn over six years. Critics argue that the windfall tax discourages investment in the North Sea.
But the scale of profits at Shell and BP, which will report next month, should prompt companies to pay more. Shell says it expects to pay windfall tax in the UK and EU of around £1.6billion – against an annual profit of around £31billion, which is expected to be revealed Thursday by the new general manager Wael Sawan.
Its windfall tax contributions will also be dwarfed by the £20bn returned to investors in dividends and share buybacks last year alone.
BP has also had an explosive year and is set to reveal it more than doubled its profit to £23bn. He expects to pay around £645million in windfall tax in the UK and Europe in 2022.
Wholesale gas prices have fallen in recent weeks, but remain at high levels. An energy support package for households ends in March.
Small businesses also face a precipice in April, when the government’s energy support program is cut.
Tina McKenzie, policy chair of the Federation of Small Businesses, said it was important that any savings from lower wholesale prices be passed on to energy providers as soon as possible. “With the reduction in the government’s energy rebate in April, small businesses need more support to get through this cost of doing business crisis,” she added.
Groups representing more than 100,000 UK businesses recently accused ministers of taking a ‘dispersion’ approach to supporting businesses with their energy costs, fearing high bills could force many to close this year.
They want companies to be able to renegotiate contracts made when wholesale gas prices peaked last summer.