- Windfall tax on bumper profits could save millions of
households from falling into fuel poverty
A spike in oil and gas prices resulting from Russia’s invasion of
Ukraine could provide energy firms operating in the UK with
unexpected windfall profits of £11.6bn this year from oil and gas
extracted from the North Sea, a new analysis from Greenpeace UK
and Oil Change International reveals [1].
Using data from leading industry analysts Rystad Energy,
campaigners have calculated that the wartime jump in global
energy prices will lead to a projected increase in profits from
extracting UK oil and gas of 111%.
According to the analysis, the ten companies that stand to
benefit the most from the increase include UK fossil fuels giants
BP and Shell as well as Italian oil firm Eni and China’s
state-owned CNOOC.
Outside the top ten, the Ineos Group, majority owned by Britain’s
richest man Sir James Radcliffe, is expected to see a 135%
increase in its free cash flow, while Russian energy giant
Gazprom, which is still extracting UK gas from the North Sea
thanks to a joint venture with German company Wintershall Dea, is
expected to reap profits of £80m.
The findings come as experts warned four in ten UK households
could be plunged into fuel poverty by the end of the year.
The analysis shows that a windfall tax on the £11.6 billion
additional profits could relieve energy poverty in the UK,
improve the energy efficiency of housing and deliver a mass roll
out of clean heating, which would help insure against future
price shocks and reduce emissions. This would still leave the oil
and gas companies with the £10.5 billion in free cash flow they
would have enjoyed had Russia not invaded Ukraine and spiked
prices.
£6.6 billion of the taxed profits could provide the six million
households experiencing fuel poverty with one off payments of
£1,100 pounds each. This would leave £5 billion to invest in the
nationwide roll out of heat pumps, insulation and other energy
efficiency measures - fulfilling an outstanding pledge from the
2019 Conservative manifesto - as well as increasing investment in
renewable energy infrastructure in order to increase energy
capacity.
Greenpeace UK’s climate finance advisor, Charlie Kronick,
said: “Oil giants are pocketing mountains of cash off
the back of Putin’s war, while millions of UK households are
facing fuel poverty. Is the UK government really going to just
sit back and let this injustice play out?
“These companies were in line to cash in on soaring energy prices
even before the war, but through absolutely no effort whatsoever
their estimated profits have risen to stratospheric levels.
“The UK government should be exploring every option to help
people squeezed by the cost of living crisis yet they’re acting
like rabbits caught in the headlights. There’s a simple thing
can do to break the impasse,
and that’s bring in a windfall tax on oil giants’ bloated profits
and use the money to help struggling households.”
Silje Lundberg, senior campaigner with Oil Change
International said: “The current UK tax regime has the
lowest governmental tax take in the world for an offshore oil and
gas regime. Big Oil and Gas executives are rolling in cash while
working families suffer from sky-high bills. It’s high time for
the UK Government to pass a windfall profits tax, and stop
subsidizing an industry that’s causing climate chaos. It’s up to
and the UK Government to
prevent the fossil fuel industry from harnessing a war to make
billions.”
Last week, the Chancellor, , stated that a windfall tax on
oil and gas company profits was not “off the table”, hinting at
a possible U-turn. However, his justification was an attempt to
blackmail the industry into expansion under the false premise
that producing more oil and gas from the North Sea would
provide more energy security.
New oil and gas extraction cannot provide energy security, ease
the current energy price crisis or reduce bills, since the
majority of the oil will be exported as it cannot be refined in
the UK and the gas will be sold at the international market price
even when used in the UK.
Greenpeace UK and Oil Change International are calling on the UK
government to bring in a windfall tax on the UK oil and gas
sector’s bloated profits and use the money to help vulnerable
households and accelerate the UK’s transition from expensive,
volatile fossil fuels, in order to help tackle the cost of living
crisis and slash future emissions from homes to help tackle the
climate crisis.
ENDS
Notes to editor:
-
Oil giants wartime windfall
profits analysis
