BP has tripled its profits to around £7 billion in the second quarter of the year as thousands of families in the UK struggle to pay their bills.
The Guardian reports the price of oil has rocketed as a result of Russia’s invasion of Ukraine, which means the company will hand over billions of pounds to its shareholders.
The FTSE 100 oil company on Tuesday said its preferred measure of profit, which it describes as its underlying replacement cost profit, rose to $8.5billion (£6.9billion) between April and June.
This is a rise from $6.2billion in the first three months of the year.
It is also three times BP’s underlying profits of $2.8bn in the second quarter of 2021.
It is the highest quarterly profit in BP’s history, behind only its $8.8bn underlying profit in the summer of 2008.
Shadow Chancellor Rachel Reeves said the “eye-watering profits” proved the UK government was “totally wrong” for its decision to give massive tax breaks to oil companies.
The government has introduced a windfall tax on oil companies, but Brexit opportunities minister, Jacob Rees-Mogg, said he was not in favor of an extra tax.
BP confirmed it will hand $3.5bn through a share buyback program, while it increased its total dividend payout by 10 percent to about $1.1bn.
More bad news is on the way for UK families as the energy price cap is set to rise to £3,615 a year from January 2023.
Another oil giant, Shell, also reported huge profits of nearly £10 billion between April and June.
British Gas owner Centrica has revealed profits of £1.3 billion.
BP said its huge profits were caused by higher refining margins and “continuing exceptional oil trading performance”.
Its share price increased by 4 percent on Tuesday morning.
Energy bills have been an important contributor to inflation, which has risen to a 40-year high of 9.4 percent in the UK.
Several forecasters believe inflation will move above 10 percent in the coming months.
The 25 percent windfall tax came in last month, which means it does not apply to profits made by BP or other oil companies during the second quarter.
Reeves added: “People are worried sick about energy prices rising again in the autumn, but yet again we see eye-watering profits for oil and gas producers.”
“Labour argued for months for a windfall tax on these companies to help bring bills down, but when the Tories finally U-turned they decided to hand billions of pounds back to producers in tax breaks. That is totally wrong.”
Rees-Mogg told LBC radio: “I’m not in favour of windfall taxes. The energy industry is enormously cyclical. You need to have a profitable oil sector so it can invest in extracting energy.”
The BP chief executive, Bernard Looney, declined to respond directly to the criticisms on Tuesday morning.
A spokeswoman for BP said the company expected to pay £1.9bn in UK tax in 2022, after it added an $800m charge on Tuesday to account for the energy profits levy.
She said the company has invested twice the amount it has returned to shareholders, and that many of those investments in oil and renewables will build a more reliable energy system that will cut bills down the line.
BP reports its own replacement cost profit measure to indicate its profitability before taking into account swings in the value of the oil it has in storage.
The UK government was approached for comment.