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Bumper BP earnings of £4bn in three months spark fierce criticism

Oil and gasoline large BP has reported one other set of robust outcomes as vitality costs stay excessive.

Earnings hit $5bn (£4bn) within the first three months of the yr, though this was down from $6.2bn final yr with oil costs having fallen from the height seen after Russia’s invasion of Ukraine.

Bumper earnings from vitality corporations have led to requires them to pay extra tax with households going through excessive payments.

Labour known as for a “correct” windfall tax on vitality earnings.

“After all we would like BP and others to make earnings to allow them to make investments however these are earnings that they didn’t anticipate to make, these are earnings which can be over and above as a result of the world value of vitality is so excessive,” Labour chief Sir Keir Starmer informed BBC Breakfast.

BP reported report annual earnings final yr as the corporate – together with the remainder of the vitality sector – benefitted from the surge in oil and gasoline costs following Russia’s invasion of Ukraine.

It has led to large earnings for vitality firms, but in addition fuelled an increase in vitality payments for households and companies.

Nick Butler, a former BP government and visiting professor at Kings Faculty London, mentioned the robust outcomes had come “from a superb inside enterprise efficiency but in addition from excessive costs world wide”.

However he informed the BBC’s Immediately programme the agency’s earnings have been more likely to “come down quite a bit this yr” as oil and gasoline costs have been falling again.

“That can have an effect on the income they get and the taxes they pay.”

Final yr, the UK authorities launched a windfall tax on earnings constructed from extracting UK oil and gasoline – known as the Vitality Earnings Levy (EPL) – to assist fund its scheme to decrease gasoline and electrical energy payments.

The UK’s windfall tax charge is 35%. Oil and gasoline corporations additionally pay 30% company tax on their earnings in addition to a supplementary 10% charge.

Together with the windfall tax, that takes their complete tax charge to 75%, though firms are in a position to cut back the quantity of tax they pay by factoring in losses or spending on issues like decommissioning North Sea oil platforms.

BP mentioned its UK enterprise – which accounts for lower than 10% of its international earnings – paid $650m (£520m) in tax between January and March, with about $300m as a result of EPL.

For the reason that EPL was launched final yr, BP says it has now paid an extra $1bn in tax.

The worth of Brent crude oil reached almost $128 a barrel following the invasion of Ukraine, however has fallen again since. Its value averaged $81 a barrel within the first three months of the yr, which was down 16% from the identical interval in 2022.

Wholesale gasoline costs have additionally began to fall, which has raised hopes that family payments will begin to come down this summer season.

Nevertheless, BP mentioned it anticipated oil costs to stay “elevated” within the second quarter given the latest resolution by some oil producing nations to limit output in addition to growing demand from China.