BP chief executive Bernard Looney said it would be difficult to reduce fuel prices for UK motorists more quickly after the government’s surprise tax, even as the oil company reported its highest quarterly profit in 14 years.
Prices at BP’s UK hubs fell as much as 6p a liter from their peak earlier this year as crude fell. But Looney said it would be difficult to follow France’s TotalEnergies, which has promised to step in with a series of price cuts for French drivers from September.
“Different countries are taking different approaches on how to deal with the cost of living crisis,” Looney told the Financial Times, noting that France, unlike the UK, has not raised taxes on energy companies since the crisis began.
“Our tax bill will be significantly higher here in Britain than it would otherwise be and it is clearly now for the Government to decide how to allocate the revenue from this extra tax to help those most in need.”
The UK government introduced a tax on the profits of North Sea oil and gas producers in May as it faced mounting pressure to deal with rising energy bills for consumers. BP said the levy would increase the UK tax bill beyond the £1.25bn it already expected to pay this year.
Looney’s comments come after Centrica, the owner of British Gas, last week called on the UK government to support households affected by the energy crisis.
BP’s underlying profits jumped to $8.5 billion in the second quarter, beating analysts’ forecasts of $6.8 billion and more than tripling the $2.8 billion the group made in the same period a year earlier. BP shares were up 3% in early afternoon trading.
The group’s results capped a streak of record profits for some of the world’s biggest oil and gas companies, a boom that is likely to prompt calls in some countries for another round of tax increases in the sector. US giants ExxonMobil and Chevron reported record second-quarter profits of $17.9 billion and $11.6 billion, respectively, while Shell broke its profit record for the second consecutive quarter, generating $11.5 billion in adjusted profit.
Looney, who took the top job in 2020 with a commitment to transition BP from fossil fuels to renewables, said he understood many people were under “severe financial pressure”. The best way for companies like BP to help is to invest in providing safer, more affordable forms of energy with lower carbon emissions, he added. “Our job is to help solve this energy trilemma.”
In May, BP outlined £18bn of planned investment in the UK this decade in a failed bid to stave off calls for a windfall tax. On Tuesday, it outlined some of the investments, saying it had submitted an environmental statement for the development of the Murlach oil and gas project in the North Sea and had made progress with several other wind power and electric vehicle charging projects.
Former chancellor Rishi Sunak introduced the energy profits tax, but Foreign Secretary Liz Truss, his rival for the next UK prime minister, rejected the idea of increasing its scale or scope.
“I don’t believe in windfall taxes,” she told a Tory meeting in Leeds last week. “What we need to do is encourage Shell and other companies to invest in the UK because we need to increase our productivity.”
Energy bills are expected to rise this winter. Britain’s energy price cap will rise by a further 70 percent to more than 3,358 pounds in October and top out at more than 3,600 pounds a year in January, according to forecasts published on Tuesday by energy consultancy Cornwall Insight.
Motoring group the RAC said petrol prices had started to fall from a record high of £1.92 a liter at the start of July but were still not falling fast enough and called on the government to deliver a further 10p per liter cut in fuel duty .
It is recommended
BP said its quarterly earnings were driven by “strong” refining margins and “continued exceptional performance of the oil business”. Like its European rivals Shell and Total, BP does not disclose the performance of its commercial units, but they have become regular performers.
BP’s oil refining and trading unit reported earnings before interest, taxes, depreciation and amortization of $3.7 billion, up from $2.03 billion in the previous quarter.
“The driver of the big beat was another outstanding quarter in oil products trading,” said Biraj Borhataria, analyst at RBC Capital Markets.
BP raised its dividend by 10% to $0.06 per share, higher than previously expected, and committed to buy back $3.5bn of shares in the third quarter after completing a buyback of $2.5 billion between April and July.
Additional reporting by Natalie Thomas, George Parker and David Shepherd
Add Comment