Slick

Shell — Europe’s biggest oil biz — posted a record $9B profit, yet whispers of a “windfall tax” are growing louder

Friday, May 6, 2022 by Robinhood Snacks |

Come Shell or high water… Soaring energy prices: bad for consumers, great for oil companies. How great? Yesterday, London-based Shell reported a record $9.1B quarterly profit — 3X last year’s — despite $4B+ in losses related to its leaving Russia. It’s something of a trend.

  • Pumpin’ profits: In the most recent quarter, BP posted its highest profit in a decade, despite $26B in Russia losses. Exxon said it doubled profits from last year, and Chevron quadrupled its haul.
  • Buy, buy, buybacks: Buoyed by bumper profits, all four oil giants plan to boost share buybacks and raise dividends, two ways to return $$ to investors.

Big buybacks, big blowback… US and UK lawmakers have started calling for a “windfall tax” on energy giants, a one-time tax on their excess profits. The idea is to use the cash to help consumers with rising prices at the pump. Critics say the money would be better spent investing in renewable energy.

  • Winds of change: Spain and Italy already slapped windfall taxes on some energy companies, but experts don’t expect the US or UK to follow suit.
THE TAKEAWAY

Windfalls come in many forms… Russia’s invasion of Ukraine gave oil giants a financial windfall in booming profits. It also gave them a strategic windfall: it illustrated how dependent the global economy still is on fossil fuels, whether we like it or not. Earlier this week, VW said it planned to keep using coal because of a proposed EU ban on Russian oil. Then Shell’s CEO told investors the war proves the need for big oil producers, despite the pressure to act on the climate crisis.