BP's €11bn profit on soaring oil price prompts calls for windfall tax in Britain

Tax would fund extra help for hard-hit households braced for a sharp rise in energy bills and a wider cost of living crisis

BP’s annual profits reached an eight-year high of $12.8bn (€11.3bn) in 2021 as it benefited from a surge in energy prices.

BP’s annual profits reached an eight-year high of $12.8bn (€11.3bn) in 2021 as it benefited from a surge in energy prices, prompting renewed calls for a windfall tax on fossil fuel companies to relieve the financial pressure on households facing a sharp rise in bills.

The bumper annual results were aided by a $4.1bn profit in the final quarter of 2021 as global gas demand recovered and oil prices rallied to seven-year highs. The annual profits compared with a $5.7bn loss in 2020, when the Covid-19 pandemic reduced demand for energy.

Natural gas and electricity prices have soared since last summer because of tight gas supplies and rising demand as economies bounced back from the pandemic and the standoff between Russia and Ukraine pushed gas prices higher.

BP’s results prompted fresh calls in Britain for a windfall tax on fossil fuel companies to fund extra help for hard-hit households braced for a sharp rise in energy bills and a wider cost of living crisis. Last week, BP’s rival Shell reported a quadrupling of 2021 profits to $19.3bn.

Rachel Reeves, Labour's shadow chancellor, tweeted: “The chancellor’s energy plans last week left families more worried than ever. It’s time for Labour’s plan for a one-off windfall tax on oil & gas producers to cut bills.” 

Ed Miliband, shadow secretary of state for climate and net zero, said that the British chancellor "is completely out of step with the mood of the country in rejecting a windfall tax". 

"His buy now pay later scheme for the energy spike will just push the costs on to future bills, and the government has no plan to create a more secure and sustainable energy sector for the future," he said, referring to a measure announced by the British government last week.

Greenpeace call

Greenpeace also called for a windfall tax on energy companies. Its UK head of climate, Kate Blagojevic, said that the "profits are a slap in the face to the millions of people dreading their next energy bill". 

"BP and Shell are raking in billions from the gas price crisis while enjoying one of the most favourable tax regimes in the world for offshore drillers," she said. 

The UK's Liberal Democrat leader, Ed Davey, said that "it simply cannot be right these energy companies are making super-profits while people are too scared to turn their radiators on and terrified there will be a cold snap”.

In December, BP chief executive Bernard Looney said the energy crisis had transformed the company into a “cash machine”.

The huge profits come as UK households face a record energy bill increase of 54% from April, with the average annual bill rising by £700 (€830) to £1,971, pushing more families into fuel poverty. 

In the US, oil giants ExxonMobil and Chevron have in the past week reported net profits of $23bn and $15.6bn respectively for last year — the highest since 2014, when crude last traded above $100 a barrel.

• Guardian service