After oil and gas prices skyrocketed, BP’s profits for the first three months of this year more than doubled. The energy behemoth posted an underlying profit of $6.2 billion, up from $2.6 billion in the previous quarter and well ahead of estimates.

The spike was attributed to “extraordinary oil and gas trading,” according to BP. Rising earnings have sparked proposals for a one-time windfall tax on energy providers to aid UK homeowners struggling to keep up with rising prices.

This form of fee is aimed at companies that have been fortunate enough to benefit from something they were not responsible for, such as a windfall. A dramatic spike in oil prices has fueled BP’s earnings, which was first fueled by rising demand as economies reopened following the Covid lockdowns.

The energy market, according to BP CEO Bernard Looney, is “a cash machine.” Oil prices soared much higher after the war in Ukraine broke out and western countries slapped sanctions on Russia as a result of its invasion. Russia is the world’s second-largest crude oil exporter and the world’s largest natural gas exporter.

Inflation in the United Kingdom is at its highest level in 30 years, because to rising oil and gas costs, which have pushed up fuel prices as well as the cost of domestic electricity.

Labour leader Sir Keir Starmer said that BP’s profits – which beat analysts’ expectations of $4.5bn – “reinforce the case that we’ve been making which is that, with so many people struggling to pay their energy bills, we should have a windfall tax on oil and gas companies in the North Sea who have made more profit than they were expecting”.

Italy has announced that it will raise its tax on energy companies’ windfall earnings from 10 per cent to 25 per cent, although the UK government opposes such a charge.

A windfall tax, according to Prime Minister Boris Johnson, would stifle investment and raise oil prices in the long run.

He told ITV: “If you put a windfall tax on the energy companies, what that means is that you discourage them from making the investments that we want to see that will, in the end, keep energy prices lower for everybody.”

Energy corporations should “pay a bit extra to help the most needy,” according to Liberal Democrat leader Ed Davey.

“The Conservative government’s refusal to introduce a windfall tax on the super profits of oil companies is becoming impossible to justify,” he said. “BP is raking in eye-watering profits while millions of people struggle to pay the bills.”

Chancellor Rishi Sunak has previously stated that if firms do not invest enough in the UK’s energy supply, he will consider a windfall tax policy.

BP revealed plans to invest £18 billion in green and fossil fuel businesses in the United Kingdom by the end of the decade on Tuesday.

However, it also announced that it would buy back additional $2.5 billion in shares and keep dividends at 5.46 cents per share.

BP intends to pay £1 billion in taxes on its North Sea revenues in 2022, on top of the £250 million it has spent in other taxes in the UK in recent years.

Looney said: “We’re backing Britain. It’s been our home for over 110 years, and we’ve been investing in North Sea oil and gas for more than 50 years.

“We’re fully committed to the UK’s energy transition – providing reliable home-grown energy and, at the same time, focusing on the drive to net zero.”

The possibility of a windfall tax appears to have been averted thanks to BP’s vow to invest £18 billion in the UK over the next decade and its projection that it will pay approximately a billion pounds in UK tax this year.

While the £18 billion amount only includes planned initiatives, it represents a higher percentage of their total investment than in past years. While the chancellor makes the ultimate tax choice, the business secretary applauded the investment, and the prime minister dismissed talk of a tax on oil and gas profits once more.

 Opposition parties are sceptical, pointing to BP’s goal of utilising 60 per cent of extra revenues to buy back shares and the other 40 percent to pay down debt.

The dispute is likely to continue, especially because Shell is anticipated to report even better profit numbers later this week.

BP pledging billions of pounds in projects to increase domestic energy security was “no surprise,” according to Russ Mould of investment platform AJ Bell.

“Whether this will be enough to stave off a new levy remains to be seen. The political pressure to do so is only likely to escalate as the cost of living continues to surge in the UK,” he said.

Former BP vice president Nick Butler told the BBC’s Today show that the government may impose a higher tax burden on the energy giant.

“I think the corporation can answer that by showing that they are truly helping to energy security,” said the visiting professor at Kings College London.

Following the Kremlin’s attack on Ukraine, BP stated it had suffered a $24.4 billion loss as a result of its decision to sell its stake in Russian energy company Rosneft.

BP lost $20.3 billion in the first quarter, including the cost of selling its 19.75 per cent stake in Rosneft.

“In a quarter dominated by the tragic events in Ukraine and volatility in energy markets, BP’s focus has been on supplying the reliable energy our customers need,” said Mr Looney.

He added that the oil market would continue to be volatile and he did not expect “any let off on prices any time soon”.

(Adapted from BBC.com)

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