Russian oil ban not enough to stop them funding war says expert
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Labour have called on the Government to impose a windfall tax on profits made by energy companies. Energy companies have returned huge quarterly profits while Brits pay mammoth energy bills, which are likely to rise even further as 2022 goes on.
How much profit do energy companies make?
BP’s underlying profit more than doubled in the first three months of 2022, up to £4.9 billion.
However, the company wrote off money when it decided to abandon its investments in Russian oil companies.
The colossal earnings are the company’s highest reported quarterly profits in more than a decade, and around £4 billion more than analysts expected.
In the same period, Shell’s profits nearly tripled to £7.3 billion – its biggest ever quarterly profit.
Like BP, the company said pulling out of Russia cost it £3.1 billion.
The chief executive of Shell, Ben van Beurden, has taken more than £70 million in pay and bonuses since taking on the role in 2014.
Labour has repeatedly called for a one-off, year-long levy on energy companies, arguing it could raise more than a billion to fund discounts on home energy bills.
Prime Minister Boris Johnson, however, has so far objected, claiming that a windfall tax could keep oil prices high in the long-term and hamper investments.
But he appeared to soften his stance in Prime Minister’s Questions today, saying: “We will look at measures, we will look at all the measures that we need to take, to get people through to the other side.
“But the only reason we can do that is because we took the tough decisions that were necessary during the pandemic, which would not have been possible if we listened to him [Sir Keir].”
Sir Keir Starmer said: “Doesn’t the Prime Minister realise that working people across the country can’t afford to wait while he vacillates? It’s time to make his mind up.”
Why are energy prices so high?
With energy prices high, companies that extract oil and gas from the ground charge much higher prices than they would have done before.
There is also greater demand as the world slowly recovers from the pandemic and the war in Ukraine creates uncertainty about supplies from Russia.
This is known as a windfall – while the energy companies could not have known they would have profited from unforeseen circumstances, they still did.
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Energy prices are expected to increase again in October, when the next energy price cap will be adjusted.
On top of this, sky high inflation is making everyday goods like food and clothes more expensive.
Inflation has now reached nine percent, it was announced by the Bank of England today, which is mostly driven by the stark rise in energy costs.
European countries Italy and Spain have already imposed windfall taxes so the public can be helped with the soaring cost of energy.
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