Youf you want an illustration of the political perils of making huge oil and gas profits in the UK, look no further than a £400 charitable donation from the boss of BP Plc.
That’s what Chief Executive Officer Bernard Looney had to offer, in a swift piece of reputational management, after it emerged in an interviewHe told the Times that he did not know the UK government provided direct financial help to families in order to pay for their high energy bills.
Looney, whose salary this year is £1.4 million, has little need of the extra funds that will go to every household in the country. Nevertheless, this incident is crucial for a company like BP.
British oil company reports a profit surge on Tuesday. It follows similar profits for other large oil and gas companies last week.
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Out of $8.45 billion in profits BP posted for the second quarter, $3.5 billion will be used to buy back the company’s own shares, and the dividend will rise by 10%. These handsome returns for investors are not comfortable with the real pain many British families will experience in the next months.
Analysts at Cornwall Insight said they expect a typical household’s energy bill to be well over £3,000 until at least the end of 2023, an unprecedented increase that would plunge millions into poverty.
“I understand that people are under intense financial pressure here in the U.K. and across the world,” Looney said in an interview. “We can all acknowledge that it’s a very, very difficult situation. So the question is how can we help?” BP is working flat out to help solve the energy crisis, he said.
This could be the key political issue for whoever becomes the U.K.’s next prime minister. Rishi Sunak (ex-Chancellor of Exchequer) is one candidate who has already implemented a windfall tax for oil and gas companies in order to finance public support. That will cost BP’s North Sea business about $800 million in additional levies until the end of 2025, the company said Tuesday.
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Governments may have to invest billions more if they feel that households need additional financial assistance. The industry is seeing more calls to increase taxes.
“While households are being plunged into poverty with knock-on-impacts for the whole economy, fossil fuel companies are laughing all the way to the bank,” Doug Parr, chief scientist for Greenpeace UK, said in an emailed statement. “The government must bring in a proper windfall tax on these monster profits.”
In addition to Looney’s donation, which will be matched by Chief Financial Officer Murray Auchincloss, the company highlighted its plans invest as much as £18 billion into the UK this decade on fossil fuel extraction, renewable energy production and EV charging. According to the company, these investments will help create thousands more jobs throughout the country.
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