Shell Reports Highest Profits in 115 Years
On Thursday, oil and gas giant Shell reported record annual profits of $39.9B for 2022 after energy prices surged following Russia's invasion of Ukraine. The company's profits were double those from the previous year and its highest in 115 years....
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Facts
- On Thursday, oil and gas giant Shell reported record annual profits of $39.9B for 2022 after energy prices surged following Russia's invasion of Ukraine. The company's profits were double those from the previous year and its highest in 115 years.1
- Shell reported a profit of $9.8B in Q4, with over 40% of the company's full-year earnings coming from its integrated gas operations, which include liquified natural gas trading.2
- The British company's record 2022 earnings mirror those reported by US rivals earlier this week, including ExxonMobil's $59.1B report and Chevron's $36.5B recorded profit.2
- Shell's latest figures have added pressure on the UK government to impose higher windfall taxes on the energy sector, which were introduced on North Sea operators last year.3
- The Chancellor of the Exchequer, Jeremy Hunt, later announced in November 2022 that the windfall tax would rise from 25% to 35%. The move was expected to raise an additional £14B ($17B) per year for the British government.4
- Despite the introduction of last year's windfall tax — known as the Energy Profits Levy — Shell previously said it wouldn't pay any UK tax in 2023 due to offsets. The company changed its tune, however, saying it now expects to pay about $134M in windfall taxes for 2022 and over $500M for this year.1
Sources: 1BBC News, 2CNN, 3Guardian and 4Independent.
Narratives
- Left narrative, as provided by Fairnessfoundation. Oil giants have gained excess profits due to the war in Ukraine and the rapid rise of energy prices. A more serious and fair windfall tax on energy companies' profits would redress the imbalance between companies' contributions to the state and their earnings and help struggling families pay their rapidly increasing utility bills. Individuals are obligated to contribute to society through taxes and other forms of support, and companies must do so too.
- Right narrative, as provided by Spectator (UK). Windfall taxes weren't a good idea in the first place, and increasing them will have serious repercussions. While it may seem like an obvious solution to the UK's growing hole in public finances, in reality, it's a short-term crutch that will lead to a new set of problems down the road: It discourages domestic investment and sends the dangerous message to businesses that success must be accompanied by a heavy price.