By Andy Silvester
Oil majors will update the market this week, allowing us to add a third idiom to a list includes something about bears defecating in forested areas and the Pope remaining unimpressed with Lutherian teaching: when BP and Shell report bumper profits, politicians are going to get involved.
As we report today, most expect healthy numbers out of the two energy giants. Both continue to benefit from outsized oil prices, with whatever their most recent haul comes to only adding to a windfall in recent years.
The Conservatives have already introduced a levy on these profits, borrowing more from Jeremy Corbyn than Adam Smith, and Labour are no doubt itching to get their hands on the prized goose to see if they can squeeze out another golden egg or two. The wisdom of such a measure has already become apparent: the UK’s largest North Sea oil and gas operator has effectively hit pause on all development, on the grounds it’s no longer profitable. Another win for Treasury wonks, that, but the politics of the issue make a reversal regrettably unlikely.
Chief amongst the critics of these so-called excess profits will be the ever more extreme climate campaigners, who fail to see the need for a transition to a greener future and would presumably rather see us simply turn off the global economy for a few years.
Other more ‘sensible’ talking heads will conveniently forget that these same energy companies saw losses well into the billions during the Covid-19 pandemic, when we don’t recall mass protests demanding a bailout.
Little credit will be given to either BP or Shell for the cash being invested in newer, climate-friendly technology, investment which will take years to pay off, with no guarantee it will. Nor will too many find time to congratulate the longer-term investors who are happy for boss class to do so. Yet even the briefest reflection reveals one obvious truth: the road to a green future goes through BP and Shell.
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