Energy giants striking it rich
Backlash at ‘grotesque’ profits as families face crippling bills
TWO of Britain’s biggest energy companies faced a fierce backlash yesterday after announcing ‘grotesque’ profits as families face crippling rises in their power bills.
British Gas owner Centrica said its profits in the first half of the year rose fivefold to £1.34billion.
And Shell reported record quarterly profits of £9.5billion – or more than £100million a day – as it cashed in on the soaring price of oil and gas.
Both companies will now lavish their bumper earnings on shareholders, benefiting pension funds as well as many small investors who piled into the 1980s ‘Tell Sid’ privatisation of British Gas.
It came as personal finance expert Martin Lewis said this winter was ‘going to be desperate’ and urged Tory leadership candidates Liz Truss and Rishi Sunak to sit down with Boris Johnson and take action now.
He said pledges to cut green levies or remove VAT by Miss Truss and Mr Sunak respectively were ‘trivial’ at a time when
‘Expensive fossil fuels ’
bills this autumn could be £2,300 higher than they were a year ago.
Prime Minister Mr Johnson acknowledged ‘the pressures people are facing on their cost of living’. But he added: ‘ The global inflation problems that we’re seeing, the energy squeeze, the cost of gas, every country around the world is feeling it.
‘My argument to you would be that sometimes you’ve got to go through periods of difficulty and you’ve got to remember that they are just inevitable.’
Howard Cox, founder of the Fair Fuel UK campaign, accused Shell of ‘wallowing in such immense profits that are completely down to an opportune increase in global oil prices’. Campaign group
Fuel Poverty Action said the figures were ‘grotesque’, adding: ‘While millions go into debt, go hungry, and die in cold, poorly insulated homes, this money from our bills goes into further investment in dirty, polluting and expensive fossil fuels.’ The Ukraine war has caused a spike in global energy prices which is benefiting companies that extract fuel from oil wells and gas fields.
The situation could get even worse if Vladimir Putin chokes off gas supplies to Europe this winter. Mr Lewis, founder of MoneySaving Expert, asked the Tory leadership candidates on BBC Radio 4’s Today programme to call a truce and ‘sit in a room, decide what you are going to do together, take a little bit of collective action and give the panicking people across the country a little bit of respite from this’.
Centrica’s half- year profit of £ 1.34billion was up from £262million a year ago, while Shell’s £9.5billion haul – for the second quarter alone – smashed a record set only three months earlier, and was up from £4.6billion a year ago.
Centrica’s results will see it reinstate a dividend cancelled dur
ing the pandemic, distributing £59million to shareholders, including half a million small investors.
Chief executive Chris o’Shea said: ‘I know it’s difficult to see the word profits, or dividends,
or similar words when people are having a tough time.’
Centrica’s results showed that it made only £6 profits per British Gas customer because the energy price cap curbed its ability to pass on surging wholesale prices.
Instead it was its upstream gas and oil production and exploration businesses that did well. The group also put an estimate of £600million on the cost of the Government’s windfall tax – which is partly paying for a £37billion package for struggling families. Mr o’Shea waived his annual £1.1million bonus last year but refused to say whether he would do the same again. he received a total pay packet of £875,000 for 2021.
Shell distributed £6.1billion to shareholders – including a buy- back of £ 4.5billion in shares and dividends of £1.6billion – during the quarter. It announced a further £4.9billion buy-back on the latest results.
Shell boss Ben van Beurden, who was paid £6.2million last year, acknowledged that families were facing ‘terrible’ financial pressures, but suggested it would take a ‘miracle’ to head off the global energy crisis.
‘Take a bit of collective action’