Amidst soaring fuel prices and high energy bills, British oil and gas giant Shell Plc posted a 39.9 billion dollar profit last year. It is the highest yearly profit ever recorded in the history of Shell plc since it was founded in 1907. The company posted this multi-billion dollar profit when common households in the United Kingdom are finding it difficult to manage rising energy prices.
In the last three months of 2022, Shell Plc posted record earnings of 9.8 billion dollars as higher oil prices in the international market helped the company to reap profits. The profit posted by the company in 2022 is higher than the previous record of 31 billion dollars in 2008.
Russian special military operation in Ukraine and sanctions on Russian oil and gas triggered massive price hikes for energy commodities in the international market. Multinational oil and gas companies based in the United States and the United Kingdom made use of this situation to reap huge amounts of profit. As production costs remained more or less the same, high demand and concerns about supply helped companies increase their earnings.
To make these profits accessible to the public, the government of the United Kingdom in 2022 decided to introduce a windfall tax called the Energy Profits Levy on oil and gas companies operating in the North Sea. Before introducing this new legislation companies were using loopholes in the tax system to avoid paying any tax to the government. Since taxes on profits that are reinvested into oil production operations are refunded, oil companies used this as a reason to avoid tax liability.
Under the new windfall taxation law, companies will have to pay an amount of tax on excess profits. Shell Plc earlier announced that it is expecting to pay nearly £1.7 billion in such taxes for the final three months of last year.
Emma Pinchbeck, the chief executive of Energy UK said that energy bills continue to be double what they were 18 months ago. She also said that nearly 12 million households in the country spend more than 10 percent on paying energy bills. This means that nearly 40 percent of energy consumers in the United Kingdom are on the verge of fuel poverty.
Analysts think that energy prices will skyrocket in the domestic economy in April 2023 due to various economic and non-economic factors. Energy Price Guarantee is expected to rise from £2,500 a year for the typical household to £3,000.