Feb 2, 2023
Shell’s Blockbuster Profits Face Backlash in Its Own Backyard
(Bloomberg) -- Shell Plc’s blockbuster earnings last year are triggering the ire of British politicians, unions and policy analysts, who say they’re outraged the oil major made so much money while customers struggled through a cost-of-living crisis driven partly by soaring energy prices.
The criticism raises the stakes for Shell in its home market as the company decides how to pursue investments that will boost the traditional fossil-fuel business along with lower-carbon options. With the Labour Party leading opinion polls heading into the next general election, the company may become a campaign issue and eventually face higher windfall taxes as it sends more profits to shareholders.
“Bill payers will be rightly appalled to hear that oil giants like Shell are still seeing sky-high profits,” said George Dibb, head of the Centre for Economic Justice at the Institute for Public Policy Research, a left-leaning think tank. “The sheer scale of that transfer of wealth — from bill payers to shareholders — is inexcusable and demands action from the government.”
Shell posted a record profit of $39.87 billion for the full year and said it will use some of that cash for $4 billion of share buybacks plus a 15% dividend hike. The earnings are the latest evidence of a blowout year for Big Oil, with Exxon Mobil Corp. also reporting a record annual profit.
“As the British people face an energy price hike of 40% in April, the government is letting the fossil-fuel companies making bumper profits off the hook with their refusal to implement a proper windfall tax,” said Ed Miliband, Labour’s shadow climate change and net zero secretary. “It is only right that the companies making unexpected windfall profits from the proceeds of war pay their fair share.”
Last year, the company said it would evaluate plans to spend £25 billion ($31 billion) in the UK and then launched a strategic review of its business selling power and gas to British homes.
“The review was triggered, of course, by concerns on just the underlying stability in the investment climate,” Chief Executive Officer Wael Sawan said on a call with reporters Thursday. “We’ve been trying to focus on where we can invest with confidence.”
Shell paid $100 million of windfall tax in the UK last year and expects that to reach $500 million in 2023, Chief Financial Officer Sinead Gorman said. Still, there are calls for government to do more to help fund pay increases for public service workers, who have been going on strike in recent months seeking higher wages.
“These obscene profits are an insult to working families,” said Paul Nowak, general secretary of the Trades Union Congress. “Instead of holding down the pay of paramedics, teachers, firefighters and millions of other hard-pressed public servants, ministers should be making Big Oil and Gas pay their fair share.”
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