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British Petroleum Reported record yearly profits despite scaling down efforts to cut the quantity of oil and gas produced by 2030.
Profits more than doubled to $27.7 billion (£23 billion) in 2022 as energy costs skyrocketed following Russia’s invasion of Ukraine.
Other oil companies have enjoyed comparable increases, with Shell announcing record earnings of over $40 billion last week.
It has prompted calls for energy companies to pay more taxes as consumers’ rates rise.
British Petroleum Bernard Looney stated that the British corporation is “working to provide the energy the world needs” while investing in renewable energy.
However, it occurred as the company scaled its ambitions to reduce carbon emissions by cutting oil and gas output.
The corporation, one of the first to establish a goal of achieving net zero fossil emissions by 2050, previously stated that emissions would be reduced by 35-40% by the end of this decade.
However, it announced on Tuesday that it was now aiming for a 20-30% reduction, citing the necessity to continue investing in oil and gas to satisfy existing demand.
Climate campaign organization Greenpeace, whose viewpoint the BBC included in its report because of the impact of oil and gas extraction on the environment, said BP’s new approach “seems to have been heavily undermined by pressure from investors and governments to earn even more dirty money out of oil and gas.”
Energy costs began to rise after the end of Covid lockdowns, but they spiked rapidly in March last year after Russia invaded Ukraine, raising concerns about world supply.
Brent crude oil hit nearly $128 per barrel before falling back to around $80. Gas costs have also risen but are now lower than they were.
It has resulted in record profits for energy providers but has also contributed to increased home and corporate energy expenditures.
The government imposed a windfall tax on “exceptional” profits produced by energy companies last year, known as the Energy Profits Levy.
The rate was initially set at 25% but has now been raised to 35%, and it only applies to revenues derived from the extraction of UK oil and gas. Oil and gas companies must also pay a 30% corporation tax on their profits and an additional 10% rate, bringing their total tax rate to 75%.
They can, however, lower their tax bill by deducting losses or spending on items like decommissioning North Sea oil platforms.
British Petroleum said its UK operations, which account for far less than 10% of its global profits, will pay $2.2 billion in tax in 2022, including $700 million for the Energy Profits Levy.
‘War windfalls’
The BBC spoke with Andrew Griffith, Economic Secretary to the Treasury, who claimed the windfall tax struck the “correct balance” between helping families with the cost of living and protecting the UK’s energy supplies. He stated that the goal was to stimulate reinvestment of the sector’s profits into the economy.
Because of his industry experience, Nick Butler, a former senior executive at British Petroleum and a visiting lecturer at Kings College, told the BBC that oil and gas prices would not remain “exceptionally high” indefinitely.
It has resulted in record profits for energy providers while driving up family and corporate energy rates.
The government imposed a windfall tax on “exceptional” profits produced by energy companies last year, known as the Energy Profits Levy.
The rate was initially set at 25% but has now been raised to 35%, and it only applies to revenues derived from the extraction of UK oil and gas. Oil and gas companies must also pay a 30% corporation tax on their profits and an additional 10% rate, bringing their total tax rate to 75%.
They can, however, lower their tax bill by deducting losses or spending on items like decommissioning North Sea oil platforms.
British Petroleum Said its UK operations, which account for less than 10% of its entire global profits, will pay $2.2 billion in tax in 2022, including $700 million for the Energy Profits Levy.
Because of his industry experience, Nick Butler, a former senior executive at British Petroleum an a visiting lecturer at Kings College, said that oil and gas prices would not remain “exceptionally high” indefinitely.
Labor and the Liberal Democrats, who we’ve included to explain the opposition’s position, termed the gains scandalous and urged the government to raise the windfall tax.
The government has had to intervene to reduce energy bills for households, with the average home now spending £2,500 per year, which is still more than twice what it was a year ago.
Read Also: Shell records highest profit in its history
The bill ceiling will also climb to £3,000 in April, though analysts anticipate that households will spend less than that due to a recent decline in gas costs.
In addition to reporting record profits, British Petroleum upped its dividend to shareholders by 10%.
Last week, rivals Shell, Exxon Mobil, and Chevron declared similarly robust profits.
