The sector denies profiting from society’s suffering, saying it is heavily investing in the future.
While declaring record yearly profits, BP disclosed that it will miss a crucial climate goal.
The London-based company’s primary profitability metric, underlying replacement cost profit, reached $27.7 billion (£23 billion) in 2022.
Even with lower oil and gas costs in the final quarter, this is more than double last year’s amount.
Amid an energy-driven cost-of-living crisis, the earnings statistics further heated the argument over whether large oil and gas companies should return a larger portion of their windfall profits to the government in the form of windfall taxes.
It follows Shell’s recent announcement of profits of £32.2 billion.
In 2020, energy prices dropped due to the COVID-19 pandemic, causing severe losses for both enterprises.
Since then, however, the rise in oil and gas prices – most recently driven by Russia’s war in Ukraine, which constrained supply across Europe – has caused national governments, like the United Kingdom, to levy windfall taxes on the sector.
Natural gas prices are still higher than before the epidemic, despite falling from their heights.
BP stated that its oil and gas output will reduce carbon emissions by 20-30% by 2030 compared to 2019.
Its original goal was a 35-40% reduction in emissions.
Climate activists slammed it for attributing the change to increased production to meet global demand. Including Greenpeace, who demanded government involvement.
While defending the company’s performance, chief executive Bernard Looney disclosed £6.6 billion in extra investment for energy transition projects and £6.6 billion for oil and gas to address energy security concerns.
Unions, environment groups, and Labour are among the domestic critics who demand greater tax clawbacks.
They believe that the profits of energy companies have come at the expense of society as a whole because wholesale prices have produced decades of high inflation and saddled households and businesses with record-high expenditures on several fronts.
Last November, in his fall statement, Chancellor Jeremy Hunt increased the energy profits levy on UK extraction activities from 25% to 35% as the government sought to collect more on the back of its ongoing energy bill support.
The 40% corporate tax and investment rebate kept the effective tax rate at 75%.
Despite this setback, the dividends of energy companies have continued to climb due to wider and more substantial earnings. BP increased its award by 10%, resulting in a 4% increase in its share price.
As the great majority of funds are required to own top-tier companies, this is all good news for pension values.
Shareholders have been rewarded further through share repurchases. After buying $11.7 billion in 2022, BP indicated it will buy $2.75 billion in three months.
Shell announced last week that it planned to pay approximately £100 million under the conditions of the levy for its UK offshore businesses in 2016, bringing its global windfall tax total to nearly $2 billion.
Its global tax contribution totaled £10.8 billion.
BP expected a UK windfall tax of £678 million for 2022, but its results announcement showed £1.8 billion.
Harbour Energy, the largest oil and gas producer in the North Sea for the United Kingdom, cited the impact of the levy for its decision to slash employees last month.
Next month, it is scheduled to disclose the amount owed to the Treasury, having warned investors in January that the amount would be significantly greater than anticipated at the time of its half-year results.
Harbour stated that the rise in the tax necessitated a reevaluation of its North Sea operations at a time when the nation required domestic supplies to boost energy security.
In response to BP’s statistics, Labour’s Ed Miliband requested that the government take greater action.
In just eight weeks, the government intends to raise the energy price ceiling to £3,000. Labor would implement a proper windfall tax to prevent April price increases.
“When it comes to oil and gas interests, Rishi Sunak is too weak to represent the people of Britain. Only Labour is on your side, with an immediate strategy to address the cost of the living issue and a long-term plan to permanently reduce costs and transform Britain into a clean energy superpower.”
