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The nearly £7bn profit from oil giant BP in the second quarter of this year has been described as “obscene”.
On Tuesday, the company announced that underlying replacement costs – its preferred measure – rose to a far better-than-expected US$8.5bn (£6.9bn) for the three months to 30 June.
But the announcement has sparked anger as households struggle to cope with soaring bills, adding to frustrations after fellow oil giant Shell and British Gas owner Centrica also reported bumper results last week.
Mark Ruskell, environment spokesman for the Scottish Greens, said it was “unsightly” that companies were “making record profits while millions of households are hit with bills like never before”.
“Things cannot go on like this,” he added.
“We need real and immediate action from the Treasury before costs rise again.
“It means a meaningful tax windfall to provide real relief for people in the here and now, but it also means a big investment in renewable energy so we can finally break the link between fossil fuel prices and household bills.”
The proposed windfall tax has been criticized for providing incentives to companies that re-invest in oil and gas.
“There’s no time to waste,” Ruskell said.
“The cost of living crisis and the climate crisis are two sides of the same coin. They are the challenge for this generation and future generations.
“It is time for the UK Government to finally step up and take the climate action needed to reduce bills and accelerate the path towards a just transition away from fossil fuels.”
The news comes as energy consultant Cornwall Insight estimates that the energy cap could rise to £3,358 annually from October, increasing to £3,615 from January.
There is a real risk of a lasting legacy of poverty, debt and destitution after this crisis
Stephanie Millar
The estimate was described by Citizens Advice Scotland social justice spokeswoman Stephanie Millar as a “hammer blow”.
She added: “There is a real risk of a lasting legacy of poverty, debt and hardship after this crisis.
“People are going to feel the effects of that for years to come, having been swept up in a tsunami of rising prices and falling incomes.”
Friends of the Earth Scotland said the announcement of the rising profits at energy companies exposed a “fundamentally broken” system.
“Rising energy prices are a key driver of the cost of living crisis which is plunging millions of people in the UK into fuel poverty, but BP bosses and shareholders are getting even richer by exploiting one of our most basic needs,” said shareholder Freya Aitchison.
“BP is also exacerbating climate breakdown and extreme weather by continuing to invest and lock us into new oil and gas projects for decades to come.
“Instead of allowing these companies to continue to cause social and environmental destruction to increase their profits, we must overhaul our energy system to rapidly phase out oil and gas.
“A fair and rapid transition to renewable energy must ensure that everyone has access to affordable and clean renewable energy.”
We are very concerned about the impact this will have on consumers and on the economy
Will Webster, Offshore Energies UK
But Offshore Energies UK – a trade body representing 400 companies in the offshore energy sector – said the increase in profits was due to a rise in prices worldwide, while talking up the amount of tax that will go to the Treasury as a result of the increase.
“Quarterly and annual results only give you a snapshot of what’s happened over the past few months, so they don’t tell you much about long-term trends.
“It is worth bearing in mind that prices have been volatile in recent years and producers have also experienced periods of low returns and losses.
“We are very concerned about the impact this will have on consumers and on the economy,” said Will Webster, the group’s energy policy director.
“But the increased profits mean that the companies producing oil and gas from UK waters pay a lot more tax.
“The UK offshore industry now pays the highest rate of tax in its history and the Office for Budget Responsibility predicts it could contribute at least £12 billion to the Treasury this calendar year alone.”
