Shell profits are “obscene” – especially at a time when millions are struggling
Energy supply is just one big cash machine
Energy giants Shell and Total have reported massive profits as sky-high energy prices fuel a devastating cost-of-living crisis across the continent, with families struggling to afford heat and electricity as the winter months fast approach.
Shell, one of the biggest oil companies in the world, posted $9.5 billion in global third-quarter profits—more than double the $4.2 billion it reported during the same period last year. The United Kingdom-based corporation also announced plans to reward shareholders by buying back $4 billion worth of its stock and boosting its dividend by 15%.
The Financial Times reported that: “despite lower average crude prices compared with the second quarter, Shell benefited from a strong operational performance from its deepwater oil assets, particularly in the U.S. Gulf of Mexico, resulting in the recovery of significant ‘high-value barrels.'”
The profits are only surpassed in the company’s history by the previous quarter’s $11.5bn, leaving Europe’s largest energy company on course to smash its annual profit record of $31bn set in 2008.
In 2021 Shell reported earnings of more than $30bn. Yet the company paid no tax at all in the UK after investments and decommissioning in the North Sea exceeded all Shell’s profits from its British upstream and retail businesses in the third quarter.
Commenting on Shell recording £8bn in profits this quarter, TUC General Secretary Frances O’Grady said:
“These profits are obscene – especially at a time when millions are struggling with soaring bills. The government has run out of excuses. It must impose a higher windfall tax on oil and gas companies. The likes of Shell are treating families like cash machines. Today is another reminder of why need to bring our energy sector back into public ownership. Households across Britain are being fleeced.”
This comes after revelations Shell has paid zero windfall tax in the UK despite making record global profits of nearly $30bn (£26bn) so far this year, prompting calls for the government to overhaul a scheme that was supposed to raise billions to tackle the cost of living crisis.
Shell executives have announced that the company has thus far been able to avoid paying the U.K.’s existing windfall tax as its large investments in oil and gas development efforts in the country offset its profits there.
The UK government in May introduced an additional 25 per cent energy profits levy on oil and gas producers in the North Sea to help raise funds but Shell does not expect to pay any taxes under the energy profits levy until early next year.
Shell CEO Ben van Beurden told investors that “we should be prepared and accept that… our industry will be looked at for raising taxes in order to fund the transfers to those who need it most in these very difficult times.”
Frances O’Grady, general secretary of the U.K. Trades Union Congress, said Shell’s profit report is “obscene—especially at a time when millions are struggling with soaring bills.”
“The government has run out of excuses,” O’Grady added. “It must impose a higher windfall tax on oil and gas companies. The likes of Shell are treating families like cash machines.”
France-based Total Energies, meanwhile, reported $9.9 billion in profits, up $4.77 billion compared to the third quarter of 2021. The firm announced “a one-off salary bonus to staff to reflect its bumper profits,” according to Reuters.
Banner earnings reports from Europe’s two largest oil companies sparked fresh calls for a windfall profits tax that would return money to households being hammered by an energy cost spike stemming from Russia’s war on Ukraine, which fossil fuel giants have exploited to raise prices and pad their bottom lines.
“The announcement of yet another obscene profit for Shell shows the scale of the pain that these companies are inflicting on the public,” said Freya Aitchison, an oil and gas campaigner at Friends of the Earth Scotland. “While oil companies continue to make record-breaking profits, ordinary people are facing skyrocketing energy bills and millions are being pushed into fuel poverty.”
It seems strange that whenever we use the term crisis such as the Banking crisis or this present Energy crisis the result is both Bankers and Energy oligarchs make record profits, maybe we should redefine the meaning of the word crisis and just call it what it is, Greed!
Ukraine conflict is proving a boon to some energy producing nations as oil and Gas prices soar.
Norway expects around €94 billion in net income from its petroleum industry this year, that’s up from €29 billion a rise of €65 billion in profit from last year up 324 percent.
Norway’s sovereign wealth fund, which manages the country’s petroleum earnings, has a current value of around €1.2 trillion, or around €250,000 per citizen.
However, the US is raking it in with the supply of LNG
You have to wonder why the EU is not asking the US to put their LNG excess profits into rebuilding Ukraine. The US are cashing in on high European fuel prices Belgium, for example, saw its U.S. imports of LNG swell by some 650% while Pakistan saw its U.S. imports decline by 72%, data showed.
Benchmark gas prices in Europe have averaged $34.06 per million British thermal units (mmBtu) so far in 2022 compared with $29.99 in Asia and $6.12 in the United States.
That compares with average 2021 prices of $16.04 in Europe, $18.00 in Asia and $3.73 in the United States, data showed.
“The cargoes are going to go where the market demands it will go,” said Ed Hirs, an energy economist at the University of Houston.
STILL NOT ENOUGH
The February invasion by Europe’s top gas supplier has pushed already-high energy prices to records and prompted the EU to pledge to cut Russian gas use by two-thirds this year by hiking imports from other countries and boosting renewable energy.
Despite the unexpected increase from the United States, the EU still finds itself in a precarious position heading into the high-use winter season as Russia continues to threaten to withhold gas supplies.
Everyone’s getting rich but the people…
On mainland Europe Total, AFP reported that the company’s “bumper earnings may add fuel to the raging debate over what the French call superprofits by energy firms due to the spike in prices thanks to the Russian invasion of Ukraine.”
TotalEnergies has held on to several investments in Russia, including minority stakes in gas producer Novatek and liquefied natural gas (LNG)projects Yamal LNG and Arctic LNG 2.
Thursday showed the group had received $748 million in dividends from Russia in the first three quarters.
Of these, $349 million were booked in the third quarter and related to the Yamal venture, while $368 million came in the second quarter from its shareholding in Novatek.
The payments came in spite of calls from advisers to Ukrainian President Volodymyr Zelensky, who in a Sept. 1 letter had asked Pouyanne to reject what they called “blood money” dividends from Novatek.
“France’s opposition wants to impose a windfall tax to help fund measures to protect consumers from energy price hikes, but President Emmanuel Macron reiterated his opposition to such a measure in a prime-time television appearance on Wednesday evening,” the outlet noted.
Clémence Dubois, the lead France campaigner at 350.org, said in a statement that “Total is adding more fuel to the fire by celebrating another round of shameful profits.”
“The refiners’ month-long ongoing strike in France demanding a fair pay rise spotlights the present socio-economic model, a model that exhausts people and the planet,” said Dubois. “The intensifying climate impacts we all experience and the rise of poverty across our communities due to soaring fossil fuel prices is no accident, it is the manifestation of the unlimited greed of Total and the fossil fuel industry.”
As the BBC pointed out Thursday, the U.K. government is “limiting gas and electricity bills through the Energy Price Guarantee scheme, but instead of lasting for two years as originally planned, it will now end in April.”
“There have been warnings typical household gas and electric costs could reach more than £4,300 when support is scaled back,” the outlet noted.
A recent survey found that millions of Britons have resorted to skipping meals to make ends meet.
Fuel poverty kills thousands of people each winter in the U.K., but anti-poverty campaigner Steve Burak wrote in a blog post for Greenpeace earlier this week that he has “never seen things get as bad as they are now.”
“Skyrocketing energy bills are at the absolute heart of this cost-of-living crisis. With an estimated seven million households across Britain in fuel poverty this winter, the scale of this crisis is terrifying,” Burak continued. “We are sleepwalking into a life-or-death winter for so many people, but the government refuses to listen to us.”
“Instead,” he added, “they listen to their own voices and the voices of major fossil fuel companies by protecting their obscene profits.”