Global Times comprehensive report This summer when global consumers are struggling to cope with inflation, international oil majors have made a lot of money, reporting record quarterly earnings one after another.
In European countries such as the United Kingdom, the arrangement of imposing a "windfall profit tax" on energy companies that have repeatedly set record profits is already on the horizon, but whether this can benefit the public is controversial.
Experts believe that the implementation of the "windfall profits tax" is reasonable, but should not be regarded as an ideal solution to the energy crisis.
BP's high profits spark dissatisfaction
According to the British "Daily Mirror" report, BP's profit in the second quarter of this year reached 8.451 billion US dollars, the highest quarterly record since 2008; the profit in the first half of the year increased by 170% compared with the same period last year.
Shell, Europe's largest oil company, also announced in early July that it broke its profit record for two consecutive quarters. Shell achieved a net profit of US$18.04 billion in the second quarter, an increase of 154% month-on-month and a year-on-year increase of 426%; in the first and second quarters of this year, Shell's Adjusted net profit was $9.13 billion and $11.472 billion, the highest quarterly records since 2008.
On the whole, the recovery in the value of oil and gas assets, the rise in oil and gas prices and the increase in sales volume, and the further cost control of each company have brought huge profits to each company; Various companies have brought different degrees of losses, but they have not stopped the general trend of performance growth.
Meanwhile, many households in the UK are struggling with rising energy bills.
To this end, BP was accused of "easy money".
The British Automobile Association (AA) also pointed out that among the many petrol stations in the UK, BP has the most expensive petrol prices.
The British "Financial Times" also quoted the appeal of the two major British car driving associations RAC and AA, saying that BP and major supermarkets should control oil prices as soon as possible.
A number of local think tanks in the UK have warned that high oil prices are also driving UK inflation to 15% in the first quarter of next year.
Amid soaring profits for oil companies and soaring inflation around the world, there are calls for governments to impose higher taxes on oil companies.
In July, the British House of Commons approved a "windfall profits tax" plan, deciding to impose an additional 25% windfall profits tax on the profits of oil and gas producers in the UK North Sea until December 31, 2025.
The bill allows oil and gas companies to offset part of their taxes by investing in new oil and gas exploration projects to better protect energy security.
Sunak, who is running for party leadership and prime minister, announced a 15 billion pound package in May when he was the government's chancellor to help British households facing further increases in energy bills this autumn.
The Financial Times said, however, the urgency of the situation led the then chancellor to completely reverse his stance, announcing a £5 billion "windfall profits tax" on oil and gas companies to help pay for the plan.
Both the US and Europe are considering "windfall profits tax"
Across the ocean, America's energy giants are also reaping record profits.
Exxon Mobil and Chevron also recently announced record quarterly profits.
In the last quarter ended June 30, Exxon Mobil generated $17.9 billion in revenue, beating its previous record by $2 billion.
Chevron also posted a record second-quarter profit of $11.6 billion.
DPA reported that Exxon Mobil, Chevron, Shell and France's Total Energy in the last quarter collectively earned nearly double what they were in the same period last year.
US President Joe Biden is under pressure from members of his own party to introduce a "windfall profits tax".
Biden himself has repeatedly criticized the huge profits of US energy companies as unacceptable.
Also eager to try is Germany.
With consumer prices at record levels, more Germans are backing calls for the ruling Social Democrats and Greens to impose a so-called special tax on excess profits in times of crisis.
According to the results of a recent survey conducted by the pollster Infratest Dimap for German TV 1, 76% of people believe that a special tax on the high additional profits of energy companies is correct.
Oil companies' high profits have been harshly criticized by politicians, union officials and environmental activists against the backdrop of a twin energy and inflation crisis.
Leaders of the German Social Democrats renewed their call for such a tax in early August.
She said on the TV show that it was aimed at companies that made excess profits without relying on their own performance and innovation, that is, companies profiting from the energy crisis.
The government should ease the burden on the people and small companies.
Green Party MEP Rasmus Andresen said, "The Green Party proposes a 50% excess profit tax on excess profits. Another part of these profits should be invested in renewable energy."
In fact, some countries are already introducing such a tax.
Spain wants to take $7 billion from energy company profits over the next two years and use it directly for social spending.
Belgium intends to levy a 25% tax on excess profits of energy companies and use the earnings to reduce energy costs for private households.
In Italy, a similar "windfall profits tax" for energy companies has been reached.
Austria and France are also considering similar measures.
EU Consumer Protection Commissioner Vera Jurova said the special tax is beneficial and effective because it is only for the government's extra revenue from temporary excess profits, and companies' decision-making will not be affected by this.
Accept or not?
The parties are still in the game
In the face of pressure from the government and society, international oil companies have been firmly opposed to the imposition of a "windfall profits tax" and suggested increasing investment in green energy as a way to decarbonize the industry.
Shell chief executive Van Burden has expressed support for green investment as an alternative to taxation.
"Making money is a responsibility that allows us to continue investing in energy security, and the energy transition," he said. "Ultimately, this will make society less dependent on oil and gas."
Earlier, BP announced an investment plan of up to 18 billion pounds, hoping to help the United Kingdom ensure energy security and achieve net zero emissions; Shell also said that it will invest 20 billion to 25 billion pounds in the British energy system in the next ten years, More than 75% of this will go to low- and zero-carbon projects.
But such an investment scale cannot satisfy local government officials.
And with the imminent imposition of the windfall profits tax, I am afraid that the investment plans of the oil giants will also need to be reconsidered.
The German news agency quoted energy experts McNally as saying that oil companies know that they will face increasing pressure if ultra-high profits continue, but they expect the government to take balanced measures.
McNally said: “With oil prices and profits so volatile, oil companies realize they are entering a very challenging and uncertain period; they are funding government spending while facing the politics of accelerating decarbonisation pressure."
"Oil companies did not use them for green transformation after making huge profits, but continued to invest in fossil fuels." The report of the German Handelsblatt on the 6th criticized the explanations of energy companies.
Oil majors are investing in share buybacks, the report said.
In the first half of this year, BP shared the profits from the crisis to its shareholders through a $3.8 billion buyback program.
At the same time, despite the considerable additional income, funds have not flowed into the company's green transition.
Although the company has announced increased investments, it still funded the expansion of its gas and oil business in the second quarter.
Funding from Exxon and Chevron in the U.S. is almost entirely devoted to the so-called blue hydrogen project, which is based on natural gas, the report said.
Shell's investments in renewables and energy solutions increased by only $200 million, but investments in upstream (oil and gas extraction and processing) increased by more than $1 billion in just 3 months.
Overall, the 5 companies have most of their money in their own pockets.
Lin Boqiang, dean of the China Energy Policy Research Institute of Xiamen University, said in an interview with a reporter from the Global Times on the 8th that energy taxes similar to "windfall profits tax" are being implemented in many countries, and whether it is reasonable needs to be viewed from different perspectives.
China will levy special oil profits, and Russia's "windfall profits tax" will appear in the form of energy export tariffs.
Now the international energy price is very high, especially the upstream cost of the industrial chain is too high, and it is difficult to make money in the middle and lower reaches.
The role of the "windfall profit tax" is to take some money from oil and gas companies to do other things, such as subsidizing ordinary people.
Lin Boqiang also said that "windfall profits tax" is not suitable to be used as a solution to the western energy crisis. "It should be noted that when the energy market was at a low level in the past few years, these oil companies did not actually have high profits. Now the market price comparison When the time is good, start to collect 'windfall profits tax' or increase tariffs, especially when the current global energy supply and demand is relatively tight, it will dampen the enthusiasm of enterprises to produce."
German Finance Minister Christian Lindner has objected to a rising proposal for a special tax on excess profits at home.
"A special tax would open the floodgates for a populist response in tax policy," Lindner warned of jeopardizing trust in the tax system.
(Author: Ji Shuangcheng Aoki Wang Dong)