Oil giants quadruple profits amid sky-high energy prices

Oil giants quadruple profits amid sky-high energy prices
Total Antwerpen oil refinery at the Antwerp harbour, Thursday 30 November 2017. Credit: Belga / Nicolas Maeterlinck

In the second quarter of 2022, energy giants posted record profits, with some more than quadrupling their profits compared to the same period last year, according to the financial results published on 28 July.

Notably, British energy giant Shell and French TotalEnergies saw huge profit increases as the cost of fuel skyrocketed. Oil prices have now exceeded $110 per barrel, allowing major energy companies to make significant profits while customers are bled dry at the pumps.

In July, the price of Petrol 95 at the pump in Belgium reached nearly €2.00, forcing many drivers to slow down and conserve fuel.

Shell has multiplied its profits by five times compared to last year, making $18 billion in the second quarter. TotalEnergies has doubled its profits, posting $5.7 billion in the same period. Norwegian energy giant Equinor announced that it had gained a net profit of around $6.8 billion dollars in the second quarter of this year, up against $1.9 billion in the same period last year.

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These profits are despite revised financial predictions due to the loss of value of major energy companies’ investments in Russian energy companies.

TotalEnergies expected to take $3.5 billion from the loss of value in its stake in Russian energy company Novatek, which is subject to international sanctions, according to a company press release.

Proposal for taxing profits

In Belgium, Federal Energy Minister Tinne Van der Straeten announced in July that the energy sector should pay a one-off crisis contribution of 25% on excess profits.

“My proposal is to follow the Italian example and levy a special tax equal to 25% of the increase in gross margin as shown in the periodic VAT returns filed for the period from 1 January to 31 December this year,” she said.

The details of the proposal are now being worked out with Federal Finance Minister Vincent Van Peteghem and will be discussed during the Government’s budget talks after the summer.

Much of the economic costs of rising fuel prices are ultimately being paid for by the consumer. The Belgian transportation sector has been particularly hard hit, increasing the cost of logistics across the Belgian economy.

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