August 10, 2022
BP says it difficult for motorists to cut fuel prices despite rising profits

BP chief executive Bernard Looney has said it will be difficult for UK motorists to sharply cut fuel prices after the government’s unexpected tax cuts, despite the oil major reporting its highest quarterly profit in 14 years .

Prices in BP’s UK forecourt have fallen to 6p a liter from the highest level earlier this year as crude oil tumbled. But Looney said it would be difficult to follow France’s Total Energies, which has promised to intervene with a series of price cuts for French motorists from September.

“Different countries are choosing different ways to handle the cost of living crisis,” Looney told the Financial Times, noting that, unlike Britain, France has increased taxes on energy companies since the start of the crisis. Had not.

“Our tax bill will be much higher here in the UK than it would have been otherwise and it is clearly now up to the government to allocate revenue from that additional tax to help those in need.”

The UK government introduced a levy on profits for North Sea oil and gas producers in May, as it faced mounting pressure to address rising energy bills for consumers. BP said the levy would increase its tax bill in the UK by £1.25bn which it expected to pay already this year.

Looney’s comments come after British Gas owner Centrica last week called on the UK government to support families affected by the energy crisis.

BP’s underlying profit rose to $8.5 billion in the second quarter, higher than analysts’ estimates of $6.8 billion and more than triple the $2.8 billion the group reported in the same period a year earlier. BP shares rose 3 per cent in afternoon trade.

The group’s results cap a series of record-breaking earnings for some of the world’s biggest oil and gas companies, a surge that is likely to spark calls for another round of tax hikes on the sector in some countries. US giants ExxonMobil and Chevron reported profits of $17.9 billion and $11.6 billion, respectively, in the second quarter, while Shell broke its record profit margins for the second consecutive quarter, adding $11.5 billion in adjusted earnings.

Looney, who took the top position in 2020 with a commitment to transition BP from fossil fuels to renewables, said he understood that many people were under “deep financial pressure”. He said the best way for companies like BP to help was to invest in providing a safer, more affordable, low-carbon form of energy. “Our job is to help solve that energy crisis.”

In May BP outlined £18bn of planned investment in the UK over the decade, in a failed attempt to shut down calls for an unexpected tax. On Tuesday, it said it had submitted an environmental statement for the development of the Murlach oil and gas project in the North Sea and made progress in wind power and electric vehicle charging, along with several other projects, setting out some investments.

Former Chancellor Rishi Sunak introduced the energy benefit levy, but Foreign Secretary Liz Truss, his rival to become Britain’s next prime minister, rejected the idea of ​​increasing its scale or scope.

“I don’t believe in unpredictable taxes,” she said at a Tory Hastings meeting in Leeds last week. “What we should be doing is encouraging Shell and other companies to invest in the UK because we need to increase our productivity.”

Electricity bills are going to increase further this winter. Britain’s energy price range will rise 70 percent to more than £3,358 in October and more than £3,600 a year in January, according to forecasts published by Energy Consultancy on Tuesday.

Motoring group RAC said petrol prices had started falling from a record £1.92 a liter in early July but were still not falling fast enough and called on the government to cut fuel duty by another 10p per litre. did.

BP said its quarterly profits were driven by “strong” refining margins and “continued exceptional oil business performance”. Like its European rivals Shell and Total, BP doesn’t break down the performance of its trading units, but they have become consistent performers.

The BP unit, which refines and trades oil, reported earnings of $3.7 billion before interest, taxes, depreciation and amortization, up from $2.03 billion in the previous quarter.

“Another exceptional quarter of the oil products business was the driver of the big beat,” said Biraj Borkhtaria, an analyst at RBC Capital Markets.

BP raised its dividend 10 percent to $0.06 per share, higher than before, and bought back $3.5 billion of stock in the third quarter after completing a $2.5 billion buyback between April and July. was committed to.

Additional reporting from Nathalie Thomas, George Parker and David Shepard

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