BP posts highest profit in eight years amid surging cost of living crisis

8 February 2022, 09:11 | Updated: 8 February 2022, 12:25

BP's profits come amid a crippling cost of living crisis
BP's profits come amid a crippling cost of living crisis. Picture: Alamy

By Patrick Grafton-Green

BP has posted its highest annual profit in eight years as millions face a surging cost of living crisis in the UK.

The oil giant swung a massive $12.8 billion (£9.5 billion) profit for 2021, including more than $4 billion (£3 billion) in the final three months of the year alone.

The news will intensify pressure on oil firms as they reap mammoth hauls while households and businesses struggle amid soaring inflation.

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Shell last week reported a hefty spike in profits on the same day as Ofgem announced a near £700 rise in the energy price cap, prompting calls for a windfall tax.

Opposition parties and activists are arguing that with households paying through their teeth - energy bills are set to spike more than 50% in April - some of the huge profits being made by companies which extract gas should be reclaimed to help.

Ed Miliband, shadow secretary of state for climate and net zero, said: "BP's results yet again demonstrate the case for a windfall tax. The boss of BP described the energy price crisis as a cash machine for his company - and the people supplying the cash are the British people through rocketing energy bills.

"In these circumstances, it is only fair and right for oil and gas producers to contribute to helping the millions of families facing soaring inflation and a cost of living crisis."

Mr Miliband described Chancellor Rishi Sunak as "completely out of step with the mood of the country in rejecting a windfall tax". 

He added: "His buy now pay later scheme for the energy spike will just push the costs onto future bills, and the Government has no plan to create a more secure and sustainable energy sector for the future."

Mr Sunak pledged support to ease the pressure on families after Ofgem's announcement.

He outlined three ways the Government will help - a £200 discount on bills to be repaid over five years, a £150 council tax rebate for those with properties in bands A-D, and a discretionary fund of £150 million for local authorities to help some lower income families.

BP, which suffered losses of $5.7 billion (£4.2 billion) in 2020 as the pandemic took hold, also announced more cash returns for shareholders.

Oil and gas prices have since rebounded as economies worldwide reopened.

Liberal Democrat leader Sir Ed Davey said: "It simply cannot be right these energy companies are making super profits whilst people are too scared to turn their radiators on and terrified there will be a cold snap.

"A windfall tax is the best way to get money to the people who need it quickly, but also to make sure there is some sense of trust and proportionality in the system."

Greenpeace branded BP's 2021 profits as a "slap in the face to the millions of people dreading their next energy bill".

BP insisted that it is heavily investing the profits it makes back into shifting to lower carbon alternatives to fossil fuels as it announced plans alongside its results to boost investment in renewable energy.

For every £1 it earns in the UK, it has committed to spend £2 out to at least 2025, according to the group.

Chief executive Bernard Looney told CNBC a windfall tax would not address the current crisis.

He said: "We need more gas, not less gas, and therefore we need to encourage investment into the North Sea and not discourage it."

"The second thing is around the transition - we need to accelerate the transition," he added.