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After Russia invaded Ukraine last year, energy prices went up, which helped the oil and gas company Shell make record profits.
In 2022, profits will reach $39.9bn (£32.2bn), twice as much as last year and the most in its 115-year history.
Since the invasion of Ukraine, when oil and gas prices went up, energy companies have made more money than ever.
Companies are under a lot of pressure to pay more taxes when families struggle to pay their bills.
The opposition said Shell’s profits were “outrageous” and the government was letting energy companies off the hook.
” They also asked that the planned increase to the cap on energy prices in April be stopped.
After the Covid lockdowns ended, energy prices started to go up, but they went up quickly in March of last year after events in Ukraine made people worry about supplies.
The price of Brent crude oil per barrel went up to almost $128 after the invasion. Since then, the price has dropped to about $83. Gas prices went up too, but they have gone down since then.
It has made energy companies a lot of money and made home, and business energy bills go up.
The Energy Profits Levy is a tax the UK government put on companies’ “extraordinary” profits last year. This was done to help pay for the plan to lower gas and electricity bills.
Shell said that, despite the move, it didn’t expect to pay any UK taxes this year because it can deduct decommissioning costs and investments in UK projects from any UK profits.
But on Thursday, it told the UK that it would have to pay a windfall tax of $134 million in 2022 and more than $500 million in 2023.
This may seem like little, but about 5% of Shell’s profits come from the UK. The rest of its income comes from other places and is taxed there.
On the other hand, critics say that Shell, which is based in the UK, has been giving more money to its shareholders than it has been putting into investments in renewable energy.
More people want Rishi Sunak and Jeremy Hunt to get more money from oil and gas profits.
An official from Downing Street said they “absolutely” understand the anger over the “extraordinary” profits, but they have no plans to raise the windfall tax.
When reporters asked the prime minister’s spokesman about possible changes, he said, “That’s for the chancellor to answer.”
Also, the official said that the government should do something “But he didn’t say what those steps would be.
Right now, the government is putting limits on how much you can spend on gas and electricity. This means that a household that uses the average amount of energy will pay £2,500 per year.
Still, that’s more than twice what it was before Russia invaded, and the limit will go up to £3,000 in April.
The government’s windfall tax only applies to money from oil and gas extraction in the UK. The rate used to be 25%, but it has now gone up to 35%.
Oil and gas companies also pay a 30% corporation tax and an extra 10% rate on their profits.
With the new “windfall tax,” their total tax rate is now 75%.
But companies can lower the tax they have to pay by counting losses or spending on things like taking oil platforms out of service in the North Sea. It has meant that energy companies like BP and Shell have paid little to no tax in the UK in recent years.
What is ‘fair’ to Shell?
Shell made much more money in a single year than it did in 2008. The company also said it had given its shareholders $6.3 billion in the last three months of 2022 and planned to buy back $4 billion worth of shares.
Wael Sawan, the CEO of Shell, said that we are living in “extremely hard times” because inflation is going crazy all over the world, but that Shell was doing its part by investing in renewable technologies.
Sinead Gorman, Shell’s CFO, also said the company paid $13 billion in taxes worldwide in 2022. It was also responsible for 11% of shipments of liquefied natural gas into the EU, which helped lessen the impact of sanctions against Russia on supplies.
Ed Miliband, the Labour party’s shadow secretary for climate change, said: “In April, people in Britain will have to pay 40% more for energy, but the government won’t put a real windfall tax. Instead, they are not punishing fossil fuel companies because they are making a lot of money.
Labor would stop the cap on energy prices from going up in April because it’s only fair that companies making big profits from war money pay their fair share.
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Leader of the Liberal Democrats Ed Davey said: “Putin’s illegal invasion of Ukraine shouldn’t let any business make so much money.
The head of the TUC, Paul Nowak, asked ministers to raise taxes on windfalls and said, “No more excuses.”
He said ministers should ensure that big oil and gas companies pay their fair share instead of holding down the pay of paramedics, firefighters, teachers, and millions of other hard-working public servants.