British oil and gas company, Shell, have reported that in 2022 their overall profits were at a record high, at around £32 billion. This is the highest they have been in the 115 the company has been running and is roughly double the profits that were made in 2021.
Energy prices have been rising since the Covid-19 pandemic hit the UK, and since Russia’s invasion of Ukraine, these prices have spiked further. Households throughout the UK have been struggling due to this energy crisis.
In 2021, the Energy Profits Levy was introduced by the UK Government to tax oil and gas companies that had ‘extraordinary’ profits. The levy has been put in place to make sure that these companies, which will see profit due to the high prices of oil and gas, are paying their fair share in tax, to help lower bills.
Shell, however, has claimed that it will only pay $134 million in windfall tax for 2022, despite the rate of the levy starting at 25% of profits, which has now increased to 35%. Shell had previously stated that they would not have to pay this tax, due to being able to offset decommissioning costs and investments connected with UK projects. Although they have later announced that the $134 million will be paid, and they are expecting to pay around $500 million for 2023.
The oil and gas companies profits are huge, however it is reported that only 5% of these profits are taxable in the UK, as the remaining profits are made in other areas of the world.
Opposition to this increase in profits has come from the Labour Party, as Ed Miliband, Labour’s shadow climate change secretary, has stated that:
“As the British people face an energy price hike of 40% in April, the government is letting the fossil fuel companies making bumper profits off the hook with their refusal to implement a proper windfall tax.”
The Liberal Democrats are also showing their opposition as they have stated that these oil and gas companies are profiting from war. The party’s leader, Ed Davey was recorded saying:
“No company should be making these kind of outrageous profits out of Putin’s illegal invasion of Ukraine… They must tax the oil and gas companies properly and at the very least ensure that energy bills don’t rise yet again in April.”