Northern Ireland consumers struggling with soaring energy costs will be angered by reports that oil giant BP’s profits have trebled, the Consumer Council has said.
Peter McClenaghan, the Consumer Council’s Director of Infrastructure and Sustainability, said it was clear that steps needed to be taken to regulate “enormous profits” being raked in by major energy companies.
BP has revealed second-quarter profits more than trebled to a 14-year high as it joined rival Shell in reaping the benefits of soaring oil and gas prices.
They reported underlying replacement cost profits as exceeding expectations by jumping to $8.5bn US dollars (£6.9bn) for the three months to June 30, which is $2.8bn higher (£2.3bn) than a year ago.
Other major energy firms including British Gas owner Centrica have also reported huge profits last week.
Mr McClenaghan said: “Many consumers in Northern Ireland will be angry to see the profits recorded by global multinational energy companies given that so many people here are struggling with fuel and home heating oil costs; filling up a car now costs close to £100.”
He said the Consumer Council was working with the Competition and Markets Authority who are beginning a detailed review of the fuel price market.
Early findings have shown a contrast in Northern Ireland, with local petrol and diesel retailers not appearing to make undue profits over the last 12 months.
He added that the Consumer Council also works closely with the Department of the Economy and the Utility Regulator, which regulates the companies who distribute and supply natural gas and electricity in Northern Ireland to ensure they don’t make excessive profits.
“However, there are clearly problems in the energy supply chain outside Northern Ireland. The CMA has highlighted the profits made from refining oil into petrol and diesel appear to have increased and we are now seeing global companies such as BP recording enormous profits. Given these factors we understand why some EU nations have chosen to implement windfall taxes on companies making unexpectedly high profits.”
Despite their bumper profits, BP have warned there won't be any reduction in energy prices over the summer, predicting that crude oil and gas prices will remain high over the third quarter because of disruption from Russia.
Households across Britain have now been warned that they will face an annual energy bill of £3,615 this winter, according to energy consultant Cornwall Insight.
Joshua Warner is the market analyst at City Index, and stated this was a “recipe that should continue to deliver bumper earnings for BP and other oil and gas giants”.
The UK Government is introducing a windfall tax on the profits of energy companies, but has faced criticism for giving strong incentives for companies to invest in oil and gas, while there are no incentives for green investment.
Another factor was that BP's half-year figures were hit by a huge £24.4bn (£19.9bn) fallout from choosing to drop a near 20% stake in the Russian oil producer Rosneft in response to the Ukraine war.
This means there are statutory replacement costs of $15.4bn (£13bn) against profits of $5.7bn (£4.7bn) a year earlier.
BP chief executive Bernard Looney has claimed that the company is finding a way to “perform while transforming”.
“Our people have continued to work hard throughout the quarter helping to solve the energy trilemma – secure, affordable and lower carbon energy,” he said.
“We do this by providing the oil and gas the world needs today – while at the same time, investing to accelerate the energy transition.”