Oil and gas giant BP has reported profits of £7.1bn between July an September 2022. The staggering bumper profits come as oil and gas prices remain high following Russia’s invasion of Ukraine.
BP’s profits, which are double that of the same period last year, have been slammed by environmental groups and the left, who have highlighted both the climate and cost of living crises – the latter being largely driven by energy prices. There have also been renewed calls for increasing the windfall tax on fossil fuel companies.
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The reports of BP’s mega-profits come just days after Shell reported similar figures. Shell made £8.2bn between July and September 2022 and did not pay anything in the oil and gas windfall tax. That’s because of a loophole in the windfall tax which gives tax breaks to companies for investing in more fossil fuel extraction. BP has said it will pay $800m in windfall tax this year.
Dozens of climate and energy justice campaigners call for a stronger windfall profits tax to fund home insulation and renewable power generation from inside the U.K. Parliament in London on October 24, 2022. (Photo: Suzanne Plunkett/Greenpeace)
[The situation on fracking has changed since this article was published 3 days ago. The new UK government under Rishi Sunak has made clear that fracking is not permitted in UK.] Republished from Common Dreams under Creative Commons licence (CC BY-NC-ND 3.0).
“Delay has cost lives. Chaos costs lives. And it will cost more lives this winter and every winter,” campaigners say. “No one benefits except the oil and gas profiteers.”
Hours after lawmakers from the ruling Conservative Party voted to make Rishi Sunak the United Kingdom’s third prime minister this year, more than 30 climate and energy justice activists occupied the lobby of Parliament to demand that the government fund home insulation and renewable power generation through a more robust tax on oil and gas corporations’ windfall profits.
Almost seven million people in the U.K.—nearly a quarter of the country’s population—are facing fuel poverty as winter quickly approaches. Meanwhile, heavily subsidized fossil fuel giants are raking in record profits, which they use to block policies that would facilitate a green transition and rein in their destructive industry.
Greenpeace campaigners, armed with sky-high utility bills from across the country, read the testimonies of people struggling to make ends meet amid a historic cost-of-living crisis that Sunak’s right-wing predecessors—Boris Johnson and Liz Truss—and Tory colleagues have, according to progressive critics, exacerbated through adherence to neoliberal orthodoxy.
Stressing that “chaos costs lives,” activists made the case for simultaneously addressing soaring energy prices and the worsening climate emergency by taxing fossil fuel profits and using the revenue to invest in better residential insulation and expanded clean energy production.
Today 30+ Greenpeace activists occupied parliament, bringing energy bills and reading out testimonies from people across the country just as @RishiSunak is announced as the new Prime Minister. He must deliver a proper windfall tax to insulate homes. #ChaosCostsLivespic.twitter.com/ecVytnsqYc
“Thanks to spiraling gas prices and the oldest, coldest housing in Europe, millions of people are being pushed into fuel poverty,” Greenpeace U.K. noted in a blog post. “People across the country have waited for government after government to provide enough help to lower their energy bills—but mostly what we’ve had is political chaos.”
The group continued:
Rising energy bills and cold homes will cost lives. The U.K. already has the sixth highest rate of excess winter deaths in Europe. Higher bills also disproportionately impact disabled and older people, people of color, and those from impoverished communities. For instance, many medical and mobility devices require electricity. Meaning, on average, disabled people have much higher energy bills just for using equipment they need in their day-to-day lives. Political leaders have failed to put people first and provide sufficient support for the energy crisis.
It’s political choices that have caused the levels of inequality and fuel poverty we’re facing. If this government properly taxed record fossil fuel profits, it could help fund extra support for those in need, and help pay for a nationwide program to insulate homes. Instead, the last six weeks have seen u-turns on the Conservative manifesto pledge on fracking and new commitments to North Sea oil and gas, which will wreck our climate and won’t lower our bills.
Two months ago, the U.K. Treasury estimated that the nation’s energy firms are poised to enjoy up to £170 billion ($191.9 billion) in excess profits—defined as the gap between money made now and what would have been expected based on price forecasts prior to Russia’s invasion of Ukraine—over the next two years.
A 25% windfall tax on oil and gas producers approved in July is expected to raise £5 billion ($5.6 billion) in its first year. However, the existing surtax on excess fossil fuel profits contains loopholes allowing companies to drastically reduce their tax bill by investing more in oil and gas extraction, which the industry claims will boost supply. The recently enacted windfall tax, which lasts through 2025, also exempts eletricity generators, even though Treasury officials attribute roughly two-fifths of the £170 billion in excess profits to such actors.
With winter energy bills projected to triple compared with last year, calls are growing in the U.K. to increase the windfall tax rate on excess fossil fuel profits and extend it to electricity generators benefiting from rising oil and gas prices.
While Truss vehemently opposed windfall taxes—asserting that they “send the wrong message to investors”—Sunak introduced the current windfall tax in May when he was Johnson’s chancellor of the exchequer.
According to Greenpeace, Monday’s action was meant to show Sunak that “he can’t ignore the almost seven million households facing fuel poverty.”
The life-threatening crises of surging utility bills and unmitigated greenhouse gas pollution are both caused by fossil fuel dependence, the group noted. Consequently, these problems have lifesaving solutions that are straightforward and aligned.
“To lower our bills long-term and reduce our emissions,” Greenpeace urged Sunak to do the following:
Commit to investing £6 billion [$6.8 billion] immediately to kickstart a street-by-street insulation program to keep bills low for good;
Shift to renewable energy, like wind and solar, which are cheaper and quicker to build than oil and gas; and
Properly tax oil and gas companies’ excess profits so they pay their fair share, given how much money they’ve made off these crises.
“It’s time we have a government that brings down bills for good and plays its part in tackling the climate crisis,” the group added.
On social media, Greenpeace encouraged people to sign a petition imploring U.K. lawmakers to “keep people warm this winer.”
Join these brave activists taking action and help pile pressure on the govt and @RishiSunak.
Tell the PM-in-waiting that #ChaosCostsLives and the next government must deliver a proper windfall tax to keep people warm this winter 👉 https://t.co/h57DE4eKca
“Delay has cost lives. Chaos costs lives. And it will cost more lives this winter and every winter,” the group emphasized. “No one benefits except the oil and gas profiteers. If the government were on the people’s side, the U.K. really could get on track to quitting oil, gas, and sky-high energy bills, forever.”
A coalition of groups including Just Stop Oil, Jeremy Corbyn’s Peace and Justice Project, Campaign for Nuclear Disarmament and Insulate Britain plans to disrupt central London this Saturday and Sunday with a mass civil resistance march. The march, one of several large events planned for the day, will bring thousands of ordinary people to the streets of the capital to demand an end to the government’s harmful policies. [1]
‘We All Want to Just Stop Oil’ brings together a range of groups focussed on the cost of living and climate crises. By joining forces, the partners will highlight the connections between the energy crisis, which is driving millions of families into fuel and food poverty across the UK, and the climate crisis, which right now is causing mass loss of life and suffering all over the world, impacting first and hardest on countries in the global south who have contributed the least to rising global heating. [2]
Beginning at 11am, people will assemble at 25 starting points across London, including Waterloo, Paddington and Euston stations. From these locations, the groups will converge at Westminster to demand an end to the economic and moral madness of continued oil and gas expansion. [3]
There will be a photo call at 2pm, on the northside of Westminster Bridge, close to the Boudicca monument, with coalition partners and supporters present. Spokespeople from the various partners and supporters will be available for interview.
A Just Stop Oil Spokesperson said:
“We are currently witnessing the breakdown of all we hold dear. Our government has not ‘got this’ – they are increasing the grip of fossil fuels at our throat. If the government won’t stop approving new oil and gas projects then we will make them stop. Come to Westminster from 1st October to peacefully join thousands of other ordinary people in civil resistance because our lives depend on it.”
Jeremy Corbyn, the founder of the Peace and Justice Project, said:
“Record breaking weather is happening everywhere and everything is too expensive. That’s the crisis. You can’t separate out the cost of living and climate crises. The whole system, which creates billionaires and starves hundreds of millions, is the crisis. It can’t be resolved, it must be overcome and transformed.”
Stuart Bretherton, 24, Energy For All Campaign Coordinator, Fuel Poverty Action said:
“The climate crisis and the cost of living crisis are a direct result of how our economy is run for the benefit of an energy industry that will chew us up and spit us out. But at the same time we have common solutions to both these crises. Climate justice doesn’t mean further hardship, it means warm homes, lower bills, cleaner air and a better economy for every one of us.”
Lee Jasper of Blaksox, said:
“The west relentlessly pumps out its carbon gas to feed its insatiable consumer economies, while the poorest people on the planet, in the global south endure climate catastrophe, famine and drought, whose people are being sacrificed to maintain unsustainable western lifestyles. We need climate change and climate justice.”
Zita Holbourne, Chair of Black Activists Rising Against Cuts, (BARAC UK) said:
“The issues of climate displacement, environmental injustice, migration, colonialism, reparations and systemic racism are all interconnected and part of the same struggle for racial justice and human rights globally. There can be nothing about us without us and until all of us are free, none of us are free.”
Kate Hudson, from the Campaign for Nuclear Disarmament said:
“Fossil fuels have contributed to the two greatest threats facing humanity – climate catastrophe and nuclear war. They cause and sustain global conflict, entrench inequalities and have left some of our most precious environments on the brink of irreversible collapse. CND backs JSO’s actions: the government urgently needs to switch its spending priorities particularly at this time of deep financial crisis. We need climate protection, not Trident; investment in our nurses and public services, not nuclear weapons and power, and to ensure good wages for all instead of further defence spending.”
Liam Norton, from Insulate Britain, said:
“The government’s plan to open new oil, gas and coal projects is the biggest act of government criminality in our history. They are participating in the destruction of this country and the murder of countless people around the world. What else can you call it? In order to stop new oil and gas we need to Insulate Britain. Now.”
Liz Truss has replaced Boris Johnson as prime minister of UK. The first obvious step intended to show the direction the new government intends was a budget presented by new Chancellor Kwasi Kwarteng on Friday. Kwarteng fired the Treasury's permanent secretary in the preperation of this budget.
There is a cost of living crisis in UK driven by runaway inflation and massive increases in energy bills. Despite this, Truss and Kwarteng's budget benefitted the already stinking rich. The top rate of income tax of 45% for the highest earners was abolished so that the highest rate is now 40%. Clearly that's going to benefit the rich and the very rich most.
Despite denials, this is trickle-down economics with the idea being that the economy will be stimulated by the highest earners and that benefits will trickle-down to all. There is a simple, logical argument against trickle-down economics. It is that the rich already have money that they can spend to stimulate the economy and they're not doing it, if they're already not spending their wealth, why should they now start?
There is also an alternative, logical argument that to stimulate the economy it's best to instead help the poor. The argument is that the poor are desperate and that any money they receive to alleviate their wreched situations will be spent and therefore stimulate the economy.
It appears that Liz Truss and her Chancellor Kwasi Kwarteng are pursuing outdated, discredited and abandoned economic theories which are the exact opposite to what is needed. Markets responded poorly to the budget.
Yet public ownership is opposed passionately by the Conservative government, while the leader of the opposition has said he is “not in favour” of it – despite his election on a platform that committed to “bring rail, mail, water and energy into public ownership to end the great privatisation rip-off and save you money on your fares and bills”.
Public ownership is on the media’s radar, too. When Labour leader Keir Starmer announced his policy to freeze bills this week, he was asked why he wouldn’t also nationalise energy, replying that: “In a national emergency where people are struggling to pay their bills … the right choice is for every single penny to go to reducing those bills.”
But so long as energy remains privatised, every single penny won’t. Billions of pennies will keep going to shareholders instead.
The energy market was fractured under the mass privatisations of the Thatcher governments in the 1980s. It contains three sectors: producers or suppliers (those that produce energy), retailers (those that sell you energy), and distribution or transmission (the infrastructure that transports energy to your home).
It is important to bear this in mind when we’re talking about taking energy into public ownership. We need to be clear about what we want in public ownership and why.
By 2019, Labour had a detailed plan on how to do this – worked up by the teams around then shadow business and energy secretary Rebecca Long Bailey and then shadow chancellor John McDonnell. The plan is not the only way, but it illustrates what exists and how one could go about re-establishing a public energy ecosystem, run for people not profit.
The recent TUC report shows the cost of nationalising the ‘Big 5’ energy retailers – British Gas, E.ON, EDF, Scottish Power and Ovo – to be £2.8bn, which would go on buying all the companies’ shares. That’s a lot of money, equivalent to more than the annual budget of the Sure Start programme in 2009/10 (its peak year). But it’s a one-off cost, not an annual one.
And it’s not like the current privatised system doesn’t have its costs: since June 2021, the UK government has spent £2.7bn bailing out 28 energy companies that collapsed because they put short-term profits ahead of long-term stability – companies like Bulb Energy. We have spent billions of pounds already to get nothing in return. So £2.8bn is not a large amount of money to pay to gain these assets, rather than just bailing them out.
The big energy retail companies made £23bn in dividends between 2010 and 2020 according to Common Wealth, and £43bn if you include share buy-backs. What you choose to do with that surplus in public ownership is another matter: you could use it to invest in new clean energy or to lower bills or fund staff pay rises, rather than subject your workers to fire-and-rehire practices as British Gas did last year.
Labour’s previous plan also involved taking the distribution networks – the National Grid – into public ownership. This would end the profiteering at this level, too – with £13bn paid out in dividends over the five years prior to 2019. As Long Bailey said at the time, we need “public driven and coordinated action, without which we simply will not be able to tackle climate change”. Like previous nationalisations, the purchase of the grid and distribution networks could be achieved by swapping shares for government bonds. By international accounting standards, the cost is fiscally neutral as the state gains a revenue-generating asset, which more than pays for the bond yield.
The final part of the plan – and the most complicated – is production and supply. It would be impossible to nationalise the oilfields of Saudi Arabia or Qatar – and for good reasons we should want to leave fossil fuels in the ground, anyway, rather than contest their ownership.
And so what Labour proposed in 2019 was a mass investment in new renewable energy generation projects, with the public sector taking a stake and returning profits to the public. For example, under the ‘People’s Power Plan’, we proposed 37 new offshore wind farms with a 51% public stake, delivering 52GW alone by 2030, equivalent to 38 coal power stations. There were additional proposals for onshore wind, solar, and tidal schemes, as part of a 10-year £250bn Green Transformation Fund, which included other schemes like the Warm Homes insulation initiative.
Labour’s new shadow chancellor Rachel Reeves has promised a similar level of investment – a £28bn a year climate investment pledge.
Any surplus energy would then be sold on international markets, with a People’s Power Fund – a sort of sovereign wealth fund – to deliver public investment in local communities’ social infrastructure: a genuine levelling-up fund, perhaps.
Many people will say this can’t be done, but of course it has been before. The 1945 Attlee government nationalised energy and successive Conservative governments – including those of Churchill, MacMillan and Heath – were happy to have a nationalised asset. Harold MacMillan famously accused Margaret Thatcher of “selling off the family silver” when she privatised state industries.
When I was born in 1979, the National Coal Board, British Gas and British Petroleum were all publicly-owned or majority publicly-owned companies. Between them, they were the major suppliers of our energy. Our gas bills came from British Gas and our electricity bills from our regional electricity board (in my case Seeboard, the South Eastern Electricity Board), and coal and oil fuelled our power stations.
The regional electricity boards had been brought into being by the Attlee government’s Electricity Act 1947, when electricity companies were forcibly merged into regional area boards and nationalised. The Coal Industry Nationalisation Act 1946 and the Gas Act 1948 had together brought energy into public ownership.
Seeboard was privatised in 1990, and later became part of EDF Energy – ironically, the nationalised French energy company, whose profits from the UK’s stupidity are used to subsidise French consumers.
The French government has now fully nationalised EDF (previously it was 84% publicly owned), and household energy bills rose by just 4% this year – compared to over 50% in the UK and a forecast 200% by January 2023.
If Starmer doesn’t want to listen to me (or his own commitments from 2020), perhaps emulating the centrist Emmanuel Macron in this instance would be palatable?
From the depletion of fish stocks to the burning of the Amazon, profit has proved a failed regulator for use of our natural resources
In his later years, Robin Cook argued: “The market is incapable of respecting a common resource such as the environment, which provides no price signal to express the cost of its erosion nor to warn of the long-term dangers of its destruction.”
From the depletion of fish stocks to the burning of the Amazon, profit has proved a failed regulator for use of our natural resources. The market has also failed to decarbonise at pace, or to end the scourge of fuel poverty.
On the media this week, shadow energy secretary Ed Miliband said Labour is “continuing to look at what the right long-term solution is for our energy system”. It is up to all of us to campaign for that solution to be public ownership – whether that’s from within the Labour Party (like me) or from the outside.
