ENGLAND: Profits reached $5 billion (£4 billion) in the first three months of the year, but were down from $6.2 billion in the same period last year due to the decline in oil prices. Proposals have been made for energy companies to pay more tax due to high rates.
The energy industry, including BP, profited from the rise in oil and gas prices following Russia’s invasion of Ukraine, leading to record profits and an increase in energy costs. This has resulted in large profits for energy firms but also contributed to an increase in energy costs.
Former BP executive and current visiting professor Nick Butler at Kings College London claimed that high prices all across the world, along with good internal business performance, were to blame for the positive results.
The Energy Profits Levy (EPL) was implemented by the UK government last year to help pay for its plan to reduce gas and electricity prices. It is a windfall tax on profits gained from extracting UK oil and gas, with a 35% rate and an additional 10% rate for corporations in the oil and gas industry.
BP reported that its UK business, which generates less than 10% of its global income, paid $650 million in tax between January and March, with the windfall tax accounting for $300 million of that total.
Since the EPL was introduced last year, BP has paid an extra $1 billion in tax. Businesses can lower their tax rate by accounting for losses or spending money on things like decommissioning North Sea oil facilities.
Following the invasion of Ukraine, the price of Brent crude oil rose to almost $128 per barrel, but it has since dropped. In the first three months of the year, it cost an average of $81 per barrel, which was a 16% decrease from the corresponding period in 2022.
BP expects oil prices to remain “elevated” in the second quarter due to the recent decision by some oil-producing countries to limit output and rising demand from China. This is expected to help reduce household expenses this summer.
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