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The almost £7 billion in profit made by oil giant BP in the second quarter of this year have been described as “obscene”.
On Tuesday the company announced underlying replacement cost profits – its preferred measure – jumped to a far better-than-expected 8.5 billion US dollars (£6.9 billion) for the three months to June 30.
But the announcement has caused anger as households struggle to cope with soaring bills, adding to the frustrations felt after fellow oil giant Shell and British Gas owner Centrica also reported bumper results last week.
Mark Ruskell, the environment spokesman for the Scottish Greens, said it was “obscene” that companies were “raking in record profits while millions of households are being hit like never before by bills”.
Today we share our 2Q results. We continue to work hard to provide the oil and gas the world needs now, while at the same time investing to accelerate the energy transition. $bp
— bp (@bp_plc) August 2, 2022
“Things can’t go on like this,” he added.
“We need real and immediate action from the Treasury before costs go up again.
“That means a meaningful windfall tax to deliver real relief for people here and now, but it also means a major investment in renewable energy so that we can finally break the link between fossil fuel prices and household bills.”
The proposed windfall tax has been criticised for providing incentives to companies that re-invest in oil and gas.
“There is no time to waste,” said Mr Ruskell.
“The cost-of-living crisis and the climate crisis are two sides of the same coin. They are the challenge of this generation and of future generations.
“It is time for the UK government to finally step up and take the climate action that is needed to reduce bills and accelerate our pathway towards a just transition away from fossil fuels.”
The news comes as energy consultant Cornwall Insight projected that the energy cap could increase to £3,358 annually from October, rising to £3,615 from January.
There is a real risk of a lasting legacy of poverty, debt and destitution following this crisis
The projection was described by Citizens Advice Scotland social justice spokeswoman Stephanie Millar as a “hammer blow”.
She added: “There is a real risk of a lasting legacy of poverty, debt and destitution following this crisis.
“People are going to be feeling the effects of it for years to come, having been swept up in a tsunami of rising prices and falling incomes.”
Friends of the Earth Scotland said the announcement of the increasing profits at energy firms exposed a “fundamentally broken” system.
“Rising energy prices are a key driver of the cost-of-living crisis which is plunging millions of people in the UK into fuel poverty, yet bosses and shareholders at BP are getting even richer by exploiting one of our most basic needs,” said campaigner Freya Aitchison.
“BP is also worsening climate breakdown and extreme weather by continuing to invest and lock us into new oil and gas projects for decades to come.
“Instead of allowing these companies to continue causing social and environmental devastation to boost their profits, we need to overhaul our energy system to rapidly phase out oil and gas.
“A fair and fast transition to renewables must ensure that everyone has access to affordable and clean renewable energy.”
We are very concerned at the impact this will have on consumers and on the economy
Will Webster, Offshore Energies UK
But Offshore Energies UK – a trade body representing 400 companies in the offshore energy sector – said the rise in profits was due to an increase in prices across the world, while talking up the amount of tax that will be funnelled to the Treasury as a result of the increase.
“Quarterly and annual results only give you a snapshot showing what has been happening in recent months, so they do not tell you much about longer-term trends.
“It’s worth remembering that prices have been volatile in recent years with producers also experiencing periods with low returns and losses.
“We are very concerned at the impact this will have on consumers and on the economy,” said Will Webster, the group’s energy policy manager.
“But those increased profits do mean that the companies producing oil and gas from UK waters are paying a lot more taxes.
“The UK offshore industry is now paying the highest rate of tax in its history and the Office for Budget Responsibility predicts it could contribute at least £12 billion to the Treasury in this calendar year alone.”