BP/Shell: pressure builds for a windfall tax
Big Oil has hit a seemingly unstoppable gusher of cash. In its latest quarterly results, BP announced that earnings “more than doubled from a year ago, to their highest level in more than a decade”, said Cat Rutter Pooley in the FT. The oil major celebrated its $6.25bn haul by “bumping up” its share buyback programme by another $2.5bn, which pleased shareholders. Still, the oil majors should “brace for the calls for a windfall tax” to help ease the burden for those hit hardest by the cost-of-living crisis.
BP’s energy profits took the edge off a massive “bottom line loss” – driven by the $24bn write-down of its Russian assets, including its stake in oil giant Rosneft, said James Sillars on Sky Business. But even the $20bn black hole hasn’t silenced those agitating for a levy – “so far rejected by ministers” on grounds that it “would harm investment in the country’s greener future”. Yet the issue is becoming ever more politically toxic, said Helen Cahill in The Daily Telegraph. On the morning of Thursday’s local elections, Shell was “poised to unveil a record £7bn quarterly profit” – prompting fears of “a backlash in polling booths”. Downing Street has responded with threats of a tax if BP and Shell fail “to support efforts to secure Britain’s energy supply”.
The Chancellor, Rishi Sunak, appears to have left the door “ajar”, said The Observer. But since Britain’s big drillers are already planning more North Sea expenditure and low-carbon projects, it feels like an empty threat. “This has the hallmarks of a piece of political theatre intended to head off public anger.” Experts may warn that households “face a choice between heating or eating” – even as BP observes that it has “more cash than we know what to do with”. But this is mere “government grandstanding”, which gives Big Oil “very little to worry about”.