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Highlights
- Labour has proposed a windfall tax on North Sea oil and gas producers to reduce the average UK household energy bills by £200.
- The oil and gas industry has cautioned that this move could weaken the UK’s energy security and harm the economy as well as the investments in renewable energy.
Soaring energy bills have lately been a major concern for UK households and businesses. Thus, in an attempt of reducing the average household energy bills, Labour has proposed a windfall tax on North Sea oil and gas producers. This £6.6-billion plan would lead to a cut of £200 from the average household energy bill through a whole year of VAT-free domestic energy bills along with a warm homes discount for the most vulnerable sections of the society.
Even though the cost-of-living squeeze could be lessened with the subsidisation of energy bills, the Oil and Gas industry has cautioned that this move could weaken the UK’s energy security and harm the economy as well as the investments in renewable energy. According to Mike Tholen, Sustainability Director at Oil and Gas UK, the windfall tax could negatively impact the sector as it is already facing heavy taxes and would lead to lower investors’ confidence.
He added that as compared to the corporation tax rate paid by other sectors, the upstream oil and gas industry pays approximately double the rate already. According to the opposition, the energy sector is being targeted as it has benefited from the price hike.
Let’s take a look at 5 UK energy stocks that may be impacted by the windfall tax.
RELATED READ: 3 FTSE oil & gas stocks to buy for your long-term portfolio
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Royal Dutch Shell Plc (LON: RDSA)
Royal Dutch Shell Plc, or Shell, is a globally leading oil and gas firm headquartered in Netherlands. The current market cap of the FTSE100-listed company stands at £71,222.13 million as of 10 January 2022, while giving its shareholders a return of 18.96% a year. Royal Dutch Shell Plc’s shares were trading at GBX £1,746.20, up by 0.55%, at 11:01 AM (GMT) on 10 January 2022.
BP plc (LON: BP)
BP plc is a London-headquartered oil and gas corporation which is among the world's seven oil and gas supermajors. The current market cap of the FTSE100-listed company stands at £71,588.99 million as of 10 January 2022, while giving its shareholders a return of 22.56% a year. BP plc’s shares were trading at GBX £366.10, up by 0.95%, at 11:07 AM (GMT) on 10 January 2022.
TotalEnergies SE (LON: TTE)
TotalEnergies SE is a France-based integrated oil and gas corporation and is also one of the seven oil supermajors. The current market cap of the company stands at £104,922.80 million as of 10 January 2022, while giving its shareholders a return of 25.40% a year. TotalEnergies SE’s shares closed at GBX £46.40 on 7 January 2022.
RELATED READ: What are the prospects for renewable stocks in 2022?
Ceres Power Holdings plc (LON: CWR)
UK-based developer of fuel cell technology, Ceres Power Holdings plc, seeks to deal with the challenges associated with climate change and has the LSE’s green economy mark. It is a constituent of the FTSE AIM UK 50 Index, and its current market cap stands at £1,688.91 million as of 10 January 2022, while giving its shareholders a negative return of -37.59% a year. Ceres Power Holdings plc’s shares were trading at GBX £874.00, down by 1.30%, at 11:18 AM (GMT) on 10 January 2022.
ITM Power Plc (LON: ITM)
With the aim of boosting the use of renewable energy, ITM Power Plc produces hydro energy solutions with the help of Proton Exchange Membrane (PEM) technology and has LSE’s green economy mark. It is a constituent of the FTSE AIM UK 50 Index, and its current market cap stands at £2,235.57 million as of 10 January 2022, while giving its shareholders a negative return of -38.38% a year. ITM Power Plc’s shares were trading at GBX £361.40, down by 0.88%, at 11:18 AM (GMT) on 10 January 2022.
