The UK government is calling for a windfall tax on big oil companies including Shell and BP as the commodity spikes to seven-year highs of almost $100 per barrel.
Shell and BP have seen their share prices surge this year due to tensions between Russia and Ukraine fuelling scarcity fears and sending the cost of the commodity soaring.
The oil majors have recently reported bumper earnings which are now being targeted for a potential windfall tax to help households deal with the impact of rising energy prices.
The Labour party proposed the one-off windfall tax following surging growth from the major oil producers as a means to counteract the rising oil price cap, which is set to cost consumers an estimated £693 per year in energy bills.
The price of rising energy is set to squeeze household budgets and analysts predict that UK consumers will suffer greatly without government intervention.
“The outlook is so bleak for cash strapped consumers, even the International Monetary Fund has now waded into the political waters surrounding high energy bills, urging the UK government to bring in targeted help for poorer households,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown
“Any increase to the warm homes grants would still be paid for by other energy bill payers, which is why there is increasing clamour for a windfall tax on the big North Sea oil and gas producers like Shell and BP.”
The proposal has been met with a negative response from the oil companies, with the argument against the tax rooted in lost dividends for reliant shareholders, alongside purported green energy transitioning taking a hit in a crucial stage of development.
BP recently announced in its financial year results for 2021 that its schedule for transitioning to green energy includes a complete shift to net-zero across its entire operational portfolio by 2050.
“We are accelerating the greening of BP,” said BP CEO Bernard Looney.
“Our confidence is growing in the opportunities that the energy transition offers. This allows us to raise our low carbon ambitions, and we are now aiming to be net zero across operations, production and sales by 2050 or sooner.”