BP’s bumper profit of £4 billion in three months has drawn criticism

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May 2, 2023, at 07:17 GMT

Updated 11 minutes ago

Image source, Getty Images

Oil and gas giant British Petroleum reported another set of strong results as energy prices remain elevated.

Profits were $5bn (£4bn) in the first three months of the year, although this is down from $6.2bn last year as oil prices fell from the peak seen after Russia’s invasion of Ukraine.

Bumper profits from energy companies have led to demands for them to pay more taxes, with households facing higher bills.

Labor called for an “appropriate” tax on energy profits.

“Of course we want BP and others to make profits so they can invest, but these are profits they didn’t expect to make, these are more and more profits because the global price of energy is so high,” said the Labor leader, sir. Keir Starmer told BBC Breakfast.

BP posted record annual profits last year as the company – along with the rest of the energy sector – benefited from higher oil and gas prices in the wake of Russia’s invasion of Ukraine.

It has resulted in big profits for energy companies, but it has also led to higher energy bills for homes and businesses.

Nick Butler, former BP CEO and visiting professor at Kings College London, said the strong results came “from good internal business performance but also from higher prices around the world”.

But he told the BBC’s Today program that the company’s profits are likely to “drop a lot this year” as oil and gas prices fall.

“It will have an impact on the revenue they receive and the taxes they pay.”

Last year, the UK government imposed a windfall tax on profits made from oil and gas extraction in the UK – called energy dividend tax – to help fund its scheme to lower gas and electricity bills.

The sudden income tax rate in the UK is 35%. Oil and gas companies also pay a 30% corporate tax on their profits plus an additional 10% rate.

Combined with the unexpected tax, this brings the total tax rate to 75%, although companies are able to reduce the amount of tax they pay by accounting for losses or spending on things like decommissioning North Sea oil rigs.

The price of Brent crude reached nearly $128 a barrel in the aftermath of the invasion of Ukraine, but has since fallen. Its price averaged $81 per barrel in the first three months of the year, down 16% from the same period in 2022.

Wholesale gas prices have also begun to fall, which has raised hopes that household bills will start to fall this summer.

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