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Shell profits hit record $40bn as Britons endure inflation

Business Desk |
Update: 2023-02-02 21:52:06
Shell profits hit record $40bn as Britons endure inflation

Energy giant Shell has announced record annual profits nearing $40bn, after oil and gas prices surged following Russia’s invasion of Ukraine last February.

The British company’s earnings in 2022 were the highest in its 115-year history, a milestone that has angered many Britons struggling with a cost-of-living crisis largely driven by inflated energy bills.

Shell’s annual profits soared to $39.9bn, more than doubling from a year earlier and surpassing a previous record of $31bn in 2008.

The earnings mirror those reported by the company’s US rivals earlier this week and are certain to intensify pressure on governments to further raise taxes on the sector.

The results demonstrate Shell’s “capacity to deliver vital energy to our customers in a volatile world”, new CEO Wael Sawan said in a statement.

Russia’s war in Ukraine has rocked global energy markets and Shell, like its competitors, has benefitted through its large global footprint and leading trading operations.

Governments struggling with soaring energy bills have responded by imposing windfall taxes on the energy sector, including in the United Kingdom.

Shell said it expects about $2.4bn in costs related to the levies in 2022. At the beginning of January. the company announced it will pay tax in the UK for the first time since 2017.

‘Time to make polluters pay’
But critics say the UK’s Conservative Party government needs to tighten its windfall tax regime on energy firms’ earnings in the wake of Shell’s bumper profits announcement.

“As the British people face an energy price hike of 40 percent in April, [Prime Minister] Rishi Sunak is letting the fossil fuel companies making bumper profits off the hook with his refusal to do a proper windfall tax,” Ed Miliband, the opposition Labour Party’s shadow climate and net zero secretary, said in a Twitter post.

As it stands, companies must pay a 35 percent tax on profits made from extracting UK oil and gas. However, this does not apply to other activities, such as selling fuel at petrol stations or refining oil.

The scheme also offers businesses major savings if they invest in UK fossil fuel extraction – for every 1 pound ($1.23) they spend on this, they can claim 91 pence ($1.12) back in tax relief.

Caroline Green, the former head of the UK’s Green Party, said the government was an “accomplice” to energy firms who she accused of “polluting our planet”.

“For a liveable future, we must kick out fossil fuels for good,” she said in a Twitter post.

Greenpeace, an NGO, said it was “time to make polluters pay”.

“While Shell counts their record-breaking profits, people across the world count the damage from record-breaking droughts, heatwaves and floods – which Shell’s business model is driving,” the group said.

Source Al Jazeera

BDST: 2151 HRS, FAB 02, 2023

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