Energy companies boosted by gas price spikes have paid £200bn to shareholders since 2010 | Oil and gas companies

Oil and gas companies have paid nearly £200billion to shareholders since 2010 and are set to be hit with a windfall tax to cap heating bills set to rise by up to £500 a year, according to a report on the finances of the British energy sector. .

Shell and BP are among the companies that saw their profits rise last year as wholesale gas prices soared ninefold and gasoline prices hit record highs, calling on them to help limit a £20billion bill against the UK. households.

A report by left-wing think tank Common Wealth found that Shell and BP had paid out £147billion to shareholders via dividends and share buybacks over the past decade, North Sea producers and six major energy suppliers contributing an additional £47bn.

Business Secretary Kwasi Kwarteng told MPs last September that the government was considering a plan for a one-off £2.6billion tax on generators and energy traders who would profit from the energy crisis.

It is understood that Rishi Sunak, the Chancellor, is still considering measures to limit rising bills, including a one-off tax, but with two weeks until the regulator, Ofgem, announces how much the cap on bills will be. energy will rise in April, it has yet to settle on a final package.

The Chancellor, accused of being ‘missing’ as energy costs soar, is under pressure from Tory MPs to cut state spending and cut Britain’s debts. He is known to favor a loan scheme for energy suppliers, giving them the funds to cushion the blow this year, plus a small subsidy to poorer households using the Warm Home Discount Scheme.

Several big energy bosses are known to have promoted a loan scheme as the best way to limit rising bills at a series of Treasury meetings last week.

Rishi Sunak has been accused of being “missing” due to soaring energy costs. Photography: Michael Mayhew/Allstar

However, gas prices could remain high for several years, increasing the size of debt in the energy sector and forcing suppliers to hold household bills for the rest of the decade while they pay them off.

Ofgem is expected to announce on February 5 how much bills will rise over the next financial year. About 30 energy suppliers went bankrupt last year, blaming energy price caps for their slide into bankruptcy.

Most wealthy country governments have already put financial support in place, including a €4.5 billion grant from the Italian government to limit rising bills. Ministers in Paris said last week they would force EDF, the 80% state-owned energy giant, to suffer an €8.4bn (£7bn) financial hit to protect households as part of a measure that will limit the increase in the energy bill to 4% this year.

The Biden administration has increased subsidy payments to poorer US households to cover the rising cost of gas, while in Germany the government has reduced a surcharge on bills used to support renewable energy programs, who will instead receive additional state subsidies from higher carbon emissions. taxes. Labor said it was right that the oil and gas producers who profit most from the energy crisis “play their part in helping families get through the cost of living crisis”. Ed Miliband, the Shadow Secretary of State for Climate Change and Net Zero, said: ‘When the BP chief describes the crisis as a ‘slot machine’ for his company and fossil fuel producers pay billions in share buybacks, this is a clear indication of the magnitude of the windfall profits they are making.

Torsten Bell, the director of the Resolution Foundation, said a windfall tax should be part of a package including subsidies for the poorest households. “It must make sense for companies that profit from this crisis to cover some of the costs,” he said.

The Institute for Fiscal Studies recently said a further £3bn needed to be injected into the welfare system in response to soaring energy bills and growing inflationary pressure.

The report’s authors, Joseph Baines of King’s College London and Dr Sandy Hager of City University, said Centrica and SSE, which operate in the North Sea, had seen the biggest increase in profit margins. They said that because oil and gas companies often incur losses during periods of low wholesale gas and oil prices, they pay almost all of their revenue to shareholders during more profitable periods.

“BP’s shareholder payment commitments have been so large that they cover 98.3% of their pre-tax income and are 2.5 times larger than their tax payments for the same period,” the report said. “The findings can be combined with the insights into fossil fuel subsidies offered by a recent Common Wealth report which identified an average of £12bn a year in taxpayer support for fossil fuels over the past five years” , they added.

Oil traders could also be forced to pay a windfall tax, but big companies – Vitol, Glencore, Trafigura, Mercuria and Gunvor – were not part of the study.

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