The oil and gas giant Shell reported record profits last year when Russia’s invasion of Ukraine caused energy prices to soar. Profits reached 39.9 billion dollars in 2022, the company’s highest level in 115 years. Energy companies have made record profits ever since the invasion of Ukraine led to an increase in the price of oil and gas.
Businesses are under increasing pressure to contribute more tax as families struggle with rising costs. Opposition parties asserted that Shell’s profits were outrageous and that the government was off the hook for energy companies. In addition, they demanded that the energy price cap increase in April be canceled.
Energy prices began to rise after the COVID-19 lockdowns ended, but they increased significantly in March of last year as supplies were concerned about the events in Ukraine. Brent crude oil peaked at nearly $128 per barrel following the invasion, but it has since fallen to about $83. Additionally, gas prices increased, but they are currently lower than before.
It has led to record profits for energy providers while also driving up energy costs for households and businesses. The Energy Profits Levy, a one-time tax on extraordinary profits made by businesses, was implemented by the UK government in 2022 to pay for its plan to cut gas and electricity costs.
Despite the move, Shell stated that it did not anticipate paying any taxes in the UK this year due to its ability to deduct decommissioning costs and investments in UK projects from UK profits.
Although the UK only contributes about 5% of Shell’s revenue, this may appear insignificant in comparison to Shell’s profits. However, critics highlight Shell’s practice of paying shareholders more than it has invested in renewable investments. The announcement that oil and gas profits will be used to raise additional funds puts Rishi Sunak and Jeremy Hunt under additional pressure.
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