BP’s (BP.L) annual profits surged to $12.8bn (£9.5bn), the highest profit in eight years, as millions of households face a cost of living squeeze amid a 54% increase in energy bills and record high inflation.
The energy giant saw profits for the final quarter of the year reach $4.1bn (£3bn), with analysts noting that the oil giant’s profits are the equivalent to £378 a second in the final three months of last year.
The bumper results were driven by soaring demand for oil and natural gas which is leading to huge increases in energy bills for millions of households.
Energy regulator Ofgem announced a 54% increase to its price cap from April. This means households across the UK will see their energy bills rise by around £700 a year, on average.
Inflation, the rate at which prices are rising, is expected to peak at 7.25% in April, with the Bank of England warning that the rising cost of living is going to carry on into 2023.
Last November, Bernard Looney, BP’s CEO, described the company as a “cash machine”. Now, MPs are calling for a windfall tax on energy companies like BP and Shell to fund further support for households.
“The boss of BP described the energy price crisis as a cash machine for his company – and the people supplying the cash are the British people through rocketing energy bills,” Ed Miliband, Labour’s shadow secretary of state for climate and net zero, said.
“In these circumstances, it is only fair and right for oil and gas producers to contribute to helping the millions of families facing soaring inflation and a cost of living crisis”.
BP has tried to offset the criticism by pledging to spend more than double the profit it generates in the UK on renewable energy projects across the country.
“Britain has been our home for more than 110 years and we are excited to help as it transitions to a thriving net zero economy,” Looney said.
Critics say, however, that BP’s renewables investment comes from a very low base and that the windfall tax would be enough to cover millions in energy bills.
“These profits are a slap in the face to the millions of people dreading their next energy bill,” Kate Blagojevic, Greenpeace UK’s head of climate said.
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“BP’s boss said his company is like a cash machine. Rishi Sunak should take the hint and make a very large withdrawal to help struggling families now and cut energy bills in [the] future by insulating more homes.”
The oil giant said it intends to deliver a further $1.5bn in share buybacks and maintained its dividend at 5.46 cents per share.
Net debt was reduced to $30.6bn by the end of 2021, down from $38.9bn when compared to the end of 2020.
BP’s shares have hit their highest level since early in the pandemic.
They rose 1.59% in early trading to 415p, for the first time since March 2020.
“2021 shows BP doing what we said we would – performing while transforming,” Looney said.
BP warned however that energy prices could remain volatile this year.
Stuart Lamont, investment manager at Brewin Dolphin, says BP is making progress.
“Buoyed by the rising oil price, BP has swung to a substantial profit, cut debt, invested in its business, and upped its shareholder distributions.
“Management is striking a positive tone on tis progress as BP transitions towards net zero and the company looks to be in a strong position to deliver on its commitments building up to 2030.”
Watch: What is inflation and why is it important?