Anger As Shell Oil Reports Record Profits Amid Global Energy Squeeze

Shell has just reported record profits amid a global energy crisis, causing anger and prompting some lawmakers to call for increased tax on energy companies.

The oil giant announced Thursday that it made $9.13bn (£7.3bn) in the first three months of 2022, nearly triple its $3.2bn profit in the same period last year.

Shares in the company rose by 3 percent on Thursday morning.

"The war in Ukraine is first and foremost a human tragedy, but it has also caused significant disruption to global energy markets and has shown that secure, reliable and affordable energy simply cannot be taken for granted," CEO Ben van Beurden said in a statement.

"The impacts of this uncertainty and the higher cost that comes with it are being felt far and wide. We have been engaging with governments, our customers and suppliers to work through the challenging implications and provide support and solutions where we can."

However, consumers around the world are feeling the pinch as energy costs continue to rise. The oil industry has benefitted from the soaring prices brought by a global energy crisis that has been exacerbated by the war in Ukraine, despite many energy companies' costly write-downs after leaving Russia.

Russia is the world's largest exporter of oil and natural gas, and the crippling Western sanctions imposed on Moscow in response to the war have meant that prices have been driven higher.

Shell Ben van Beurden
Royal Dutch Shell chief executive Ben van Beurden speaks at a full year results conference in London on January 31, 2019. Shell has just reported record profits amid a global energy crisis, causing anger and prompting some lawmakers to call to increase tax on energy companies. Tolga Akmen/Getty

The United States has already banned all Russian oil imports, and the European Union, which is much more reliant on Russian gas than America, is considering doing the same. On Wednesday the bloc said it plans to ban Russian oil imports within six months and refined products by the end of the year in its latest raft of economic sanctions.

The cost-of-living crisis has been particularly acute in the U.K. — with the average household's annual bills rising by £830 ($1,042) a year. News of Shell's huge profits has angered activists and led some British lawmakers to call for windfall taxes on big energy companies who are profiting from the crisis. The money raised from these taxes could help households pay their energy bills.

Daniel Johnson, a minister in Scotland's parliament, tweeted Thursday: "Shell has made over £7bn profit in 3 months. Between them BP and Shell have made £12bn as household bills are soaring. We need a windfall tax to tackle bills."

U.K. Labour Party MP Richard Burgon tweeted: "Energy giant Shell has just reported record quarterly profits of £7.3 BILLION Yet Boris Johnson still refuses to impose a Windfall Tax on them. He cares more about their mega- profits than he does your ability to pay your bills. Send him a message today!"

On Tuesday, U.K. Prime Minister Boris Johnson rebuffed calls to impose a windfall tax on big energy companies, saying that it would discourage them from making investments to keep energy prices low.

Commenting on the backlash on a media call on Thursday, Shell chief financial officer Sinead Gorman said: "The macro [economic climate] is incredibly volatile at the moment and the prices have moved substantially, we fully understand that. Of course, it is a big difference to where we were two years ago where prices were in a very different spot and our profits were too. What this is doing is driving a lot of pain for people and businesses and we can see that."

She said that Shell intended to invest £25 billion into the UK this decade, some of which will go towards "low carbon energy."

Shell was one of the first major oil companies to announce that it was pulling out of Russia because of the Ukraine war. But the company's ties with Russia are more complicated than that — it still has contractual commitments to Russian liquified natural gas.

This article was updated at 9:55 a.m. on 05/05/22 with comments from Shell.