The world’s largest oil and gas company, BP, on Tuesday reported third-quarter earnings that were higher than expected due to high commodity prices and active gas marketing and trading.
The British energy giant reported an underlying gain on replacement costs of $8.2 billion in the three months ended September, which is used as a net profit reserve. This was significantly more than the net profit of $3.3 billion recorded a year earlier, which was $8.5 billion in the previous quarter.
A Refinitiv poll of analysts had forecast net income of $6 billion for the third quarter. BP said net debt fell to $22 billion from $22.8 billion in the second quarter and announced an additional $2.5 billion in share buybacks.
It posted a financial loss of $2.2 billion for the period, down from a profit of $9.3 billion in the previous quarter. According to BP, this third-quarter result included a charge to adjust non-tax items of $8.1 billion, as well as non-tax inventory losses of $2.2 billion.
The world’s largest oil and gas companies have just posted record profits due to rising commodity prices as a result of Russia’s invasion of Ukraine.
Oil giants Shell, TotalEnergies, Exxon and Chevron reported third-quarter earnings close to $50 billion combined with BP. This has led to renewed calls for more taxes on oil companies’ record profits, especially at a time when rising petrol and gas prices have pushed up inflation worldwide.
US On Monday, President Joe Biden called on oil companies to end “war profiteering” and warned of higher taxes if they did not act to lower gasoline costs.
#BP announced further share buybacks after underlying profits doubled to $8 billion in the third quarter of 2022, leaving the energy group on track for one of its most profitable years in its history
– $8.2 billion Q3 profit up from $3.3 billion in Q3 2021 https://t.co/NNnQJ9Q8WX #Tax on unexpected income
— Carbon Tracker (@CarbonBubble) November 1, 2022
Groups representing the oil and gas industry have previously opposed proposals for a sudden tax, saying it would do nothing to stop the spike in energy prices and could even discourage investment.
According to BP CEO Bernard Looney, “This quarter’s results show that we continue to succeed as we grow.”
“We remain committed to supporting the development of secure, low-cost and low-carbon energy solutions. We are delivering the oil and gas the world needs right now, while making investments to accelerate the energy transition.” Looney said.
Shares in London-listed BP were up about 1% in morning trading. The company’s share price is up more than 45% so far this year.
The windfall tax is now a necessity
Environmental campaigning organizations pointed to BP’s third-quarter results as “slap in the face” for the millions of Britons who are experiencing a worsening cost of living crisis and claim to have shown the need for a sudden tax.
The need for a bigger, bolder windfall tax is now clear, according to Sana Yusuf, an energy campaigner at Friends of the Earth. “This should close the absurd loophole that allows businesses to pay the bare minimum if they invest in new gas and oil projects that contribute to global warming.”
A street-by-street home insulation program is to be funded with part of the billions of pounds raised, Yusuf said, to cut energy costs and curb emissions. The main cause of the climate catastrophe is the use of fossil fuels such as coal, oil and gas.
Government threatens ‘Austerity 2.0′ as energy giants’ profits soar on the backs of struggling families and businesses.
Ministers must change course, extend the windfall tax, cut energy costs and immediately muster financial support. https://t.co/XFuaDpCmkO
— Sadiq Khan (@SadiqKhan) November 1, 2022
According to Jonathan Noronha-Gant, senior fossil fuel campaigner at Global Witness, “a true windfall tax on the profits of big polluters is no longer a far cry, but a necessity.”
However, the new UK To deal permanently with this flawed energy system, the government needs to quickly put us on the path to a rapid transition from dirty fossil fuels to renewable energy sources and proper house insulation.
Our job is to ‘pay our taxes’
On a panel moderated by CNBC, BP Chief Executive Bernard Looney said he understood public interest in oil companies’ record profits, but tried to defend the company’s track record when it comes to investing and paying taxes. Looney was speaking at the ADIPEC conference in the United Arab Emirates on Monday.
The UK, Europe and the rest of the world are in for a very challenging winter, according to Looney.
Today we are sharing our Q3 results. We continue to work hard to provide the oil and gas the world needs now, while at the same time investing to accelerate the energy transition. $bp
— bp (@bp_plc) November 1, 2022
“Our job is to invest; our job is to pay our taxes. That’s our business, and we just announced a $4 billion renewable natural gas acquisition in the United States last week. We will continue to do this and do our best,” he continued.
Strong natural gas trading helped BP more than double its third-quarter profit from a year earlier to $8.15 billion and boost share buybacks by $2.5 billion amid growing calls for higher tax taxation of the oil industry.
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