After oil and gas prices skyrocketed, BP announced enormous earnings for the three months to June.
The energy giant’s underlying profits reached $8.45bn (£6.9bn), which is more than three times as much as it earned during the same period the previous year.
Profits during the first half of the year total $14.6bn, the second-highest amount in the company’s history.
This comes on the same day that it was predicted that average home energy expenses will exceed £3,600 per year this winter.
The sum is hundreds of pounds higher than originally estimated, sparking calls for further assistance for struggling families.
Dr. Craig Lowrey, the lead consultant of Cornwall Insight, stated on the BBC’s Today show that energy costs appeared likely to remain high throughout 2023 and 2024.
“This is a long-term challenge for households, and the government will need to take strong and sustained measures to help manage it,” he said.
The government is adopting a package of measures to assist people with the growing cost of living, including a £400 energy bill cut. However, there are requests for increased assistance.
Dr. Lowrey stated that the £400 would make a “dip” in the increasing costs but would not “balance this.”
BP’s profits exceeded expectations, following record profits from rival Shell and enormous earnings from British Gas owner Centrica last week.
The dramatic spike in oil and gas prices as a result of the conflict in Ukraine has contributed significantly to the astronomical growth in corporate profits.
In recent months, as a result of the invasion, Russia has cut supplies to Europe, and there are rising concerns that it may shut off the taps entirely.
The prospect of gas supply disruptions has resulted in increasing wholesale prices, which energy companies have passed on to their customers, resulting in historic increases in home energy bills.
In May, in response to political pressure, the British government announced that oil and gas companies would pay an additional 25 percent tax on earnings to assist people with rising costs.
As the legalization was not officially implemented until July, the tax will not apply to the earnings stated by BP and others from April to June.
In recent months, the price of gasoline and diesel has reached record highs at the pump, even though prices have begun to decline marginally.
BP stated that it would increase shareholder dividends by 10 percent and repurchase shares as a result of its record-breaking profit results.
Money-making machine
Last year, energy market CEO Bernard Looney referred to it as a “cash machine.”
On Tuesday, however, he stated that the company’s employees have contributed to overcoming the “energy trilemma,” which he defined as “safe, inexpensive, and reduced carbon energy.”
“We achieve this by providing the world with the oil and gas it needs today, while also investing in the acceleration of the energy transition,” he continued.
Strong refining margins and oil trading helped BP increase its profitability, and the company expects crude oil and gas prices, in addition to refining margins, to stay “elevated”
In response to the Ukraine conflict, the business sold its nearly 20 percent share in the Russian oil major Rosneft, resulting in a massive £19.9bn impact on the corporation’s first-half financials.
Richard Hunter, head of markets at online investment firm Interactive Investor, stated that BP had “already made some strong progress” in recouping the financial pain of its Russian exit and that the company’s most recent financial results were “an early indication of the company’s ability to repair such damage.”
The contrast is jarring but unavoidable. The same high oil and gas costs that leave people’s pockets empty also enrich the firms who sell them.
From April to June of this year, BP’s profit was three times that of the same period last year and the second biggest in the company’s long history.
The corporation announced it will increase shareholder payouts by £3.6 billion over the following three months. These shareholders include the majority of pension funds, but these figures are unsettling in light of fresh forecasts that the average annual energy bill will exceed £3,600.
A couple of years ago, both BP and Shell were losing billions of dollars and no one was proposing to subsidize their losses, according to insiders at both companies, which reported record profits this week.
Both firms have gained from skyrocketing international oil and gas prices, as moves to exclude Russia from the world energy market have exacerbated the spike in post-Covid global demand.
