Windfall tax calls ramp up after BP registers £9.5bn annual profit

BP revealed it swung to a mammoth 12.8 billion US dollar (£9.5 billion) underlying replacement cost profit – its preferred measure – for 2021 from losses of 5.7 billion US dollars (£4.2 billion) the previous year.

It notched up 4.07 billion US dollars (£3.01 billion) of profits in the final three months alone, which was better than expected and up from just 115 million US dollars (£85.1 million) a year earlier.

READ MORE: Oil giant's North Sea profits to fund investment in renewables

BP also announced more cash returns for shareholders, with another 1.5 billion US dollars (£1.1 billion) of share buybacks before its first-quarter 2022 results and a dividend payout of 5.46 cents (3.37p) a share for the fourth quarter.

The group recovered from 2020, when the pandemic sent it slumping 18.1 billion US dollars (£13.4 billion) into the red on a statutory basis – its biggest ever annual loss.

Shell announced $19.3 billion (£14.5b) in profits for 2021 and Exxon said that they had made $23 billion(£16.9b) profits last year.

Friends of the Earth Scotland’s just transition campaigner, Ryan Morrison, said: “Yet again we see these wealthy firms extracting billions in profit from one of our most basic needs.

“BP and other fossil fuel bosses are getting even richer as the price of energy pushes millions more homes into fuel poverty and forces people to choose between heating and eating.”

He added: “The UK’s energy system is fundamentally broken and this is clear evidence that it doesn't work for people or the planet. Oil company bosses are being allowed to make obscene profits from climate breakdown and the gas price crisis on the back of widespread devastation for people around the world.

“Instead of allowing these companies to continue causing social and environmental devastation for their own pocket, we need to overhaul our energy system to end our dependence on oil and gas.

"It’s time to rapidly scale up investment in renewables and energy efficiency while winding down fossil fuel production to create affordable renewable energy for everyone. A just transition will not be realised while profit obsessed fossil fuel companies call the shots.”

Labour has previously tabled a windfall tax to be placed on oil and gas producers to mitigate some of the rising energy bills for consumers. But the party has criticised the SNP for failing to vote in favour of the plans – while the UK GOvenrment has rejected the plan.

The party’s shadow Scotland secretary, Ian Murray, said: “With nearly £10billion in profit this year, and following Shell’s momentous year of profits, the boss of BP has described the energy price crisis as a cash machine for his company - unfortunately its families across the country providing that cash.

“With multi billion pound profits for these international corporations, it is utterly shameful that the SNP has sided with the Tories in blocking Labour’s windfall tax on oil and gas companies.

“It is no surprise the Tories have sided with big business, but it’s incredibly disappointing the SNP has decided to do the same. “Labour’s plan to tackle energy bills would save £200 for most households in Scotland and £600 for the 815,000 households hardest hit by the cost of living crisis.”

The Scottish Greens, who have long-advocated for a windfall tax, have warned that only a move away from fossil fuel gas heating systems will tackle the energy costs crisis in the long-term.

Scottish Greens energy spokesperson Mark Ruskell said: “The Scottish Greens have long advocated for windfall taxes on obscene profits, especially when people are struggling with the costs of food and energy. For example we proposed that supermarkets who saw profits surge during lockdown should pay their fair share towards the recovery.

“However, while a windfall tax on oil and gas producers and a cut of VAT on energy bills might help with rising bills in the short term, ultimately we can only tackle rising energy costs by reducing the reliance on gas.

"Analysis shows that the decision by David Cameron to “cut the green crap” has added £2.5 billion to energy bills at a time when we should have been moving away from fossil fuels, and with the UK Government charging billpayers for the cost of expensive new nuclear power stations, bills could rise even further.

“Only by investing in renewable alternatives to oil and gas can we tackle the long-term crisis of rising fuel bills. That’s why even though energy policy is reserved we are doing what we can to expand Scotland’s renewable energy capacity and make buildings more efficient and less reliant on gas.”

Liberal Democrat Leader Ed Davey said the issue “is about basic fairness”.

He added: “It simply cannot be right these energy companies are making super profits whilst people are too scared to turn their radiators on and terrified there will be a cold snap.

“The Government has said that a windfall tax would harm investment but this is an absolutely bogus argument. These profits have come out of nowhere, no energy company was expecting them, no investor was either.

"A windfall tax is the best way to get money to the people who need it quickly, but also to make sure there is some sense of trust and proportionality in the system."

BP insisted that it is heavily investing the profits it makes back into shifting to lower carbon alternatives to fossil fuels as it announced plans alongside its results to boost investment in renewable energy.

For every £1 it earns in the UK, it has committed to spend £2 out to at least 2025, according to the group.

Chief executive Bernard Looney told CNBC a windfall tax would not address the current crisis.

He said: “We need more gas, not less gas, and therefore we need to encourage investment into the North Sea and not discourage it.”

“The second thing is around the transition – we need to accelerate the transition,” he added.