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BP is facing renewed calls to divert some of its profits to help ease the cost of living crisis after the oil giant announced underlying profits of $6.2illion (£4.94m) - its highest quarterly earnings in over 10 years.
Despte the company announcing a $25 billion hit from its decision to exit Russia, pushing the oil giant to a quarterly loss of $20.3 billion (£16.2 billion), the firm’s underlying performance sparked fresh demands for a one off windfall tax.
As the country prepares for local council elections this week which will be a vital test of the popularity of Boris Johnson’s government, Chancellor Rishi Sunak is under growing pressure to do more to help millions of struggling households as energy bills rise and inflation soars.
But while Mr Sunak hinted last week that he will “look at” a possible windfall tax if energy firms failed to use profits to invest in new oil and gas projects, International Trade Secretary Anne-Marie Trevelyan insisted stripping profits from BP and other major energy companies was not the answer.
Ms Trevelyan told BBC Breakfast: “It would not be the right thing to do in my opinion to strip away profits which will be reinvested and I think where we want to see that continue and BP can lead the way in demonstrating how that investment will ensure security of supply for us.”
But Shadow Chancellor Rachel Reeves tweeted: “$6.2bn profits for BP in first three months of this year. The case for a one-off windfall tax on oil & gas producer profits cannot be ignored. Yet still the Tories won’t back Labour’s plan to use it to cut energy bills.”
Ed Miliband, Labour’s Shadow Climate Change and Net Zero Secretary, added: “Yet again we see the oil and gas companies making billions upon billions of profits coming directly from the pockets of the British people and the government shamefully refuses to act.
“The oil and gas firms may be doing their job for the shareholders of their companies but the government is negligently failing to do its job for the people of this country.
“The refusal to levy a windfall tax to help cut energy bills is deeply wrong, unfair, and tells you all you need to know about whose side this government is on - and it’s not the British people.”
And Lib Dem leader Sir Ed Davey said: “The Conservative government’s refusal to introduce a windfall tax on the super profits of oil companies is becoming impossible to justify.
“BP is raking in eye-watering profits while millions of people struggle to pay the bills. It is an unforgivable lack of leadership from Boris Johnson at a time of national crisis.
“Oil companies are handing out huge dividends and buying back shares, they could easily afford to pay a little more to help the most vulnerable.”
However Ms Trevelyan said the Chancellor’s £9bn support package to help ease rising energy bills combined with the energy proce cap which rose to just under £2,000 in April will help struggling families manage the spike in the cost of living.
She added that energy firms already paid an extra 10 per cent tax compared to other companies.
BP made an underlying profit of $6.2 billion in the first quarter, up from $2.6 billion this time last year and $4 billion in the final three months of 2021. The figure was significantly higher than analysts had expected.
Operating profits were boosted by “exceptional oil and gas trading” and higher prices, as oil and gas prices soared due to the war in Ukraine.
BP maintained its dividend of 5.46 cents per shares and said it would buyback $2.5 billion of is shares in the next few months, following $1.6 billion of buybacks so far this year.
“In a quarter dominated by the tragic events in Ukraine and volatility in energy markets, BP’s focus has been on supplying the reliable energy our customers need,” CEO Bernard Looney said.
“Our decision in February to exit our shareholding in Rosneft resulted in the material non-cash charges and headline loss we reported today. But it has not changed our strategy, our financial frame, or our expectations for shareholder distributions.”
CFO Murray Auchincloss added: “We are delivering on our commitment to shareholder distributions.”