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Highlights
- Amid the rising demand for a windfall tax, the oil and gas industry has rejected the imposition of the one-off levy.
- The tax could potentially raise around £8 billion from the sector and an additional £5 billion in the coming year, as per OEUK.
- In April, the budgets of millions of UK households were hit due to a 54% hike in energy bills.
Amid the rising demand for a windfall tax, oil and gas industries have rejected the call for the one-off levy. The supporters of the tax claim that the oil and gas giants, like BP and Shell, have been making extraordinary profits due to the soaring energy prices, and thus they should divert a share of those profits towards the reduction of household energy bills.
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According to Offshore Energies UK (OEUK), the tax could potentially raise around £8 billion from the sector
PM Boris Johnson and Chancellor Rishi Sunak are under immense pressure to introduce the tax as the cost-of-living crisis has been spiralling in the UK with inflation levels hitting the roof. As per the latest ONS data, inflation has reached a record high level of 9% in April, and the Bank of England (BoE) says that it may surpass the 10% mark in the final quarter of the year.
In April, the budgets of millions of UK households escalated due to a 54% hike in energy bills. Regulators had raised the energy price cap due to offset the earlier increases in wholesale prices. UK households have been struggling to pay their energy bills for months now, and the escalation of the Russia-Ukraine crisis has worsened the situation.
According to the representative of the UK offshore oil and gas industry, Offshore Energies UK (OEUK), the tax could potentially raise around £8 billion from the sector and an additional £5 billion in the coming year. This would be over and above the £370 billion which has been paid over the last decade.
RELATED READ: What is windfall tax? Will it affect soaring energy prices?
Opposers of the tax say that these funds could be channelised towards investing in the businesses and the overall energy sector instead. But the companies which have been earning substantially from the North Sea drilling operations, which include small ones like Harbour Energy, are afraid that the tax may be implemented, affecting their investments.
Let’s look at the share price performance of the above-mentioned oil and gas companies.
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BP plc (LON: BP.)
The shares of the oil and gas supermajor, BP plc, were up by 1.54% at 2: 15 PM (GMT+1) on 20 May 2022, at GBX 419.05. The FTSE 100 index constituent has provided its shareholders with a return of 35.70% over the last one year as of 20 May 2022. The current market cap of the company stands at £80,106.71 million.
Shell plc (LON: SHEL)
The shares of the oil and gas giant, Shell plc, were up by 1.20% at 2:18 PM (GMT+1) on 20 May 2022, at GBX 2,356.50. The FTSE 100 index constituent has provided its shareholders with a return of 70.72% over the last one year as of 20 May 2022. The current market cap of the company stands at £173,948.11 million.
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Harbour Energy plc (LON: HBR)
The shares of the independent UK oil firm, Harbour Energy plc, were up by 2.62% at 2:20 PM (GMT+1) on 20 May 2022, at GBX 454.90. The FTSE 100 index constituent has provided its shareholders with a return of 10.68% over the last one year as of 20 May 2022. The current market cap of the company stands at £4,102.89 million.
