Energy companies land huge profits as fuel prices skyrocket

AP - Michel Spingler

BP said Tuesday that underlying third-quarter profit more than doubled on high commodity prices from a year earlier to $8.15 billion after the key energy producer Russia invaded Ukraine.

The firm's profits – following equally good results at Chevron, Shell and TotalEnergies – are likely to add further pressure on the British government to slap on a windfall tax in order to help cushion the impact of a cost-of-living crisis largely sparked by high electricity and gas bills.

"This isn't going to ease calls for windfall taxes at a time when governments are facing fiscal black holes requiring difficult decisions on taxation and spending," said Oanda analyst Craig Erlam.

"Finding the right balance between taxing 'excess profits' as a result of the war in Ukraine without deterring investment won't be easy."

BP added on Tuesday that it will pay about $2.5 billion in taxes this year for its North Sea business, including $800 million related to the levy.

The British Prime Minister Rishi Sunak unveiled the windfall tax on the profits of UK energy companies earlier this year when he was finance minister in Boris Johnson's government.

Sunak has so far resisted calls to increase the tax, which has been criticised as far too small by activists.

Liquefied natural gas

Late last month, Europe's two largest energy companies Shell and TotalEnergies reported profits of more than $9 billion in the third quarter, though Shell's liquefied natural gas (LNG) division struggled to capture the benefits of high fuel prices.

France's opposition parties want President Emmanuel Macron to impose a windfall tax to help fund measures to protect consumers from energy price hikes.

(With agencies)

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