Calls for a UK windfall tax on oil and gas giants to soften the blow of the cost-of-living crisis are intensifying across the political spectrum after Shell and BP posted record profits for the first quarter of 2022.
Company filings show that the two firms’ quarterly profits are at their highest point over the past two years, with Shell’s latest profits almost tripling to $9.1bn, compared with the first quarter of 2021. BP’s profits more than doubled during the same period to $6.2bn, as the company said its trading division had an “exceptional” first quarter of 2022.
A windfall tax is understood as a one-off levy imposed on companies that have benefited from a situation they weren’t directly responsible for. The Labour Party recently published an analysis of how a windfall tax on North Sea oil and gas operators could potentially raise at least £1.95bn for the Treasury.
Boris Johnson warned today (12 May) that windfall taxes “deter investment in the very things that they need to be investing in – new technology, in new energy supply”, but he did not explicitly rule out the measure. Bernard Looney, the chief executive of BP, recently remarked that a windfall tax would not affect the company’s future investment plans.
In an interview with Sky News earlier today, the Chancellor Rishi Sunak also refused to rule out the possibility of a one-off levy, saying that “no option is off the table” if there was no “significant investment” on jobs and energy security from oil and gas companies. Meanwhile, the Conservative MP Robert Halfon, the chair of the Education Select Committee, told BBC Radio 4’s Today programme that the government “should consider properly a windfall tax”, calling the executives of oil and gas companies “the new oligarchs”.
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