Shell 'obscene' record $40bn profit fuels call for higher windfall tax
By Frank Prenesti
Date: Thursday 02 Feb 2023
(Sharecast News) - Oil and gas giant Shell on Thursday posted record annual profits of almost $40bn on the back of surging gas prices driven by Russia's war with Ukraine, prompting demands from UK politicians for further windfall taxes on energy producers amid the cost-of-living crisis.
Annual earnings doubled to $39.87bn after a record fourth-quarter profit of $9.8bn driven by higher trading from its liquefied natural gas (LNG) operations. The numbers almost immediately sparked calls for the UK government to tax energy producers further as domestic customers struggle to pay fuel bills.
The full year dividend was lifted 16% to $1.03 a share. Shell also announced a new share buyback programme of $4bn, which is expected to be completed by the first quarter 2023 results announcement.
Analysts had expected Shell's new chief executive, Wael Sawan, to report adjusted earnings of $7.97bn for the fourth quarter and $38.17bn for the year.
Bumper profits by producers in 2022 prompted the government to launch a windfall tax, called the Energy Profits Levy, which was then toughened by current Finance Minister Jeremy Hunt. Shell said it paid $1.9bn in windfall tax charges to the UK and EU.
UK politicians reacted with fury to the results, with opposition Labour Party shadow climate change secretary Ed Miliband accusing the government of letting fossil fuel companies "off the hook with their refusal to implement a proper windfall tax" as Britons face an energy price hike of 40% in April.
Paul Nowak, general secretary of the Trades Union Congress, said the profits were "obscene" and "an insult to working families".
Shell's commitment to renewables has also come under scrutiny after it was accused of overstating how much it is spending on fossil fuel alternatives and faced calls this week to be investigated by the US financial regulator.
Shell invested $24.83bn during 2022, up from $19.69bn in 2021 and spent $12.3bn on oil and gas projects, compared with $3.46bn on its renewable energy division. It expects to spend $23bn-$27bn over the next year.
Greenpeace UK senior climate justice campaigner Elena Polisano said: "World leaders have just set up a new fund to pay for the loss and damage caused by the climate crisis. Now they should force historical mega-polluters like Shell to pay into it.
"It's time to make polluters pay. If they had pivoted their business and transitioned away from fossil fuels sooner, we wouldn't be in such a deep crisis. It's time for them to stop drilling and start paying."
Liberal Democrat Party leader Sir Ed Davey said: "No company should be making these kind of outrageous profits out of Putin's illegal invasion of Ukraine."
"Rishi Sunak was warned as chancellor and now as Prime Minister that we need a proper windfall tax on companies like Shell and he has failed to take action."
Reporting by Frank Prenesti for Sharecast.com
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