13 ms·

BP sees biggest profit in 114 year history

56 points by sarreph 4y ago

LatteLazy 4y ago
>Oil and gas firms also pay 30% corporation tax on their profits as well as a supplementary 10% rate. Along with the new windfall tax, that takes their total tax rate to 75%. So that's a huge win for the Exchequer...
- rmccue 4y ago
  On UK profits only: > BP said its UK business, which accounts for less than 10% of its global profits, will pay $2.2bn in tax for 2022, including $700m due to the Energy Profits Levy.
  - LatteLazy 4y ago
    I am not sure you can tell a company to pay 75% of it's profits from other countries in tax. If that other country expects just 30%, that is a 105% tax rate...
    - blitzar 4y ago
      > I am not sure you can tell a company to pay 75% of it's profits from other countries in tax. Of course you can, they already pay tax on offshore earnings. Some countries even make their citizens pay tax on global earnings even when they dont live, work, vote or visit their country (looking at you USA) > If that other country expects just 30%, that is a 105% tax rate... Double taxation agreements exist. Where they dont the tax paid would be a cost .. so 75% of the after tax amount from the other country - i.e 82.5%
      - LatteLazy 4y ago
        A Double taxation agreement means one or both country agrees to forgo some or all the tax they would otherwise demand. That's why the US technically taxes it's citizens working abroad, but in reality collects much less than the official rate. So if we do that for companies, then you are definitely not going to get 75% in the UK and 30% locally...
- scott_w 4y ago
  As commentators point out, they've been very busy shifting money to reduce their tax bill. Also, 30 + 10 + 25 != 75, so I don't know why the BBC keep repeating this number.
  - blitzar 4y ago
    Also ... within the levy, a new ‘super-deduction’ style relief is being introduced to encourage firms to invest in oil and gas extraction in the UK. The new 80% Investment Allowance will mean businesses will overall get a 91p tax saving for every £1 they invest – providing them with an additional, immediate incentive to invest. This nearly doubles the tax relief available and means the more investment a firm makes, the less tax they will pay. Paying the windfall tax means that they had ~£0 of actual "investment" in the UK (or paid an effectively voluntary amount for goodwill purposes).
    - scott_w 4y ago
      I didn't even know that! What still stuns me is the absolute genius in applying this to renewable energy suppliers, too. A Conservative government states its belief that low tax encourages investment so they... increase taxes on renewable providers.
      - blitzar 4y ago
        Well ... my energy supplier - 100% green electricity saw fit to 5x my electricity bill. Wind / solar installed in say 2016 and expected yield X or pay-down the capital investment in Y years have seen massive windfalls and capital effective paid off thanks to the increase in prices. If anything the tax / investment rebate should tax the finished and sold projects who have had massive windfalls while not impacting the companies or projects that are still investing.
        scott_w 4y ago
        I think there’s also a separate issue with energy prices set at the most expensive one. Honestly, I’m not sure why this is still the case in this climate.
hinata08 4y ago
>Reported record annual profits after oil and gas prices surged last year following Russia's invasion of Ukraine. I'm surprised by how short termed is the strategy to actually keep up with 'market' prices. (which they don't have to do, as their workforce and costs are basically staying the same, hence a hike in price increases profits) They make higher profit now. But how much demand destruction will happen in the long term ? I myself just got an ebike to commute, which comes with a nearly 100% reduction in energy use. And I'm not alone. There isn't any traffic jam anymore to commute to where I work, because remote working is becoming widespread (first because of covid, and now gas prices), so much fewer drivers are using their cars. The local government has eventually passed laws to require landlords to properly thermally insulate homes (within a decade) Trains were scheduled again, and became popular. I no longer hear about someone driving across the country. They would just get a train (which also comes with huge energy savings) I'm surprised because the current hike isn't even fueling demand for EVs (as recharging your EV is now as expensive as getting a full tank in public spots) Ppl are just shifting away from cars and some energy intensive usages, this time.
- Maakuth 4y ago
  > I'm surprised by how short termed is the strategy to actually keep up with 'market' prices. It's supply and demand in action. Each oil company has limited capacity of production and not much flexibility to increase it in short term. As part of the supply is no longer available, there is less oil available in the market. The market mechanism drives the price up to a level where supply and demand are in balance. So the migration of oil consumers to alternatives is exactly what's supposed to happen in this case. Moreover, a single company does not have a real choice to sell for cheap. First everyone would choose this vendor for their oil needs. But as their stock and production is limited, they would soon run out of oil to sell. Even a cartel or government decision to lower the price does not cut it, because it kills the demand side incentive to find alternatives. Then you'd be in a situation where oil is cheap, but not available.
  - makomk 4y ago
    Yeah, it's just that people are unlikely to realise this because the British press has spent the last year or so lying about this for both partisan reasons (most of them hate the party currently in power) and environmentalist ones (there's been a huge campaign to block new fossil fuel production in order to fight global warming which relies on convincing people that the only reason governments haven't done so is because it'd hurt fossil fuel company profits - admitting that it'd actually increase their profits and make ordinary people worse off would get in the way of that).
blitzar 4y ago
They booked loses of ~25bn on Russian projects on the way to making a profit of 27bn for the year. Guessing the accountants wrote down everything else they could to keep the headline number as low as possible.
zelphirkalt 4y ago
All while we are trying to get away from fossile fuels. At least superficially there is a mismatch here, between the profits and some perceived Zeitgeist. Does BP do many other things, besides fossile fuels?
- nine_k 4y ago
  BP is trying hard to become big in renewables. E.g.: https://news.sky.com/story/bp-blows-away-bid-rivals-with-big-bet-on-wind-farms-12212580 https://news.sky.com/story/bp-blows-away-bid-rivals-with-big... https://www.reuters.com/business/sustainable-business/bp-gambles-big-fast-transition-oil-renewables-2021-09-20/ https://www.reuters.com/business/sustainable-business/bp-gam... https://www.bp.com/en/global/corporate/news-and-insights/press-releases/bp-and-enbw-successful-in-scotwind-offshore-wind-bid.html https://www.bp.com/en/global/corporate/news-and-insights/pre... I suppose they'll put some of this windfall into grabbing an even bigger market share in renewables.
  - oblio 4y ago
    The real question is: how big are their profits/profit margins for the new market? Edit: and here is the money quote: > The company acknowledged that its fast-growing clean-energy business - including its solar, EV-charging and wind ventures - continues to lose money. BP does not expect profits from those businesses until at least 2025. https://www.reuters.com/business/sustainable-business/bp-gambles-big-fast-transition-oil-renewables-2021-09-20/ https://www.reuters.com/business/sustainable-business/bp-gam...
    - nine_k 4y ago
      Investment is like that. First you spend on acquiring stuff, like building a large wind farm in the ocean. Then it starts to bring money, and eventually pays for itself. All the time while you are building the wind farm, you are spending more than the installation makes (it makes nothing), so you are losing money.
      - 4y ago
walthamstow 4y ago
> biggest profit in 114 year history I hate stats like this. Of course it's the biggest ever, there is more money in circulation than ever before. You see this in politics a lot, a classic from the Teresa May era was "there are more kids going to schools rated Good by Ofsted than ever before." There are more kids alive than ever before, so it's not much of an achievement is it.
- m000 4y ago
  Can you explain then why our private bank accounts didn't see the biggest annual growth ever? There is more money in circulation than ever before!
  - suddenclarity 4y ago
    I don't agree with the orginal statement because increased revenue doesn't necessarily equal profit but a simple explanation to your question is that the amount of humans increase. This results in increased demand bur doesn't mean that every person gets more. Similar how GDP has been increasing in Sweden for a long time but GDP per capita hasn't.
  - abigail95 4y ago
    It did? Personal savings has the same "covid spike" in the graph as many other metrics do.
  - ddtaylor 4y ago
    Most metrics do actually go up right now because of the massive inflation and the massive amount of money that was printed with the stimulus. I wouldn't argue that people are " richer" because they're purchasing power has been massively eroded, but across the board the numbers have went up technically.
  - Am4TIfIsER0ppos 4y ago
    Inflation is designed to steal your money in a way other than taxation.
  - deleted 4y ago
clouddrover 4y ago
> The company's profits more than doubled to $27.7bn (£23bn) in 2022, as energy prices soared after Russia invaded Ukraine. Ah, the 34th Rule of Acquisition: War is good for business. https://memory-alpha.fandom.com/wiki/Rules_of_Acquisition https://memory-alpha.fandom.com/wiki/Rules_of_Acquisition
fiftyacorn 4y ago
It annoys me that these companies aren't subject to a windfall tax. These profits are driven by the Russian embargos following the invasion of Ukraine The most annoying thing is that when the price slumps again these companies will be back cap in hand for money to decommission their oil rigs
- listenallyall 4y ago
  > these companies aren't subject to a windfall tax Last year, the government introduced a windfall tax - called the Energy Profits Levy - on the "extraordinary" profits being made at energy companies. The rate was originally set at 25%, but has now been increased to 35%
  - SilverBirch 4y ago
    It's a little more complicated than that. First, Oil & Gas in the UK pay 40% corporation tax to start with (30% corp, 10% supplementary), and the levy is on top of that, meaning they're paying 75%. However, there's an "investment allowance" that means most Oil & Gas companies in the UK can shuffle things around to not pay anything, and they're only paying these rates on UK profits which are only a tiny share of their profits.

56 points by sarreph 4y ago

>Oil and gas firms also pay 30% corporation tax on their profits as well as a supplementary 10% rate. Along with the new windfall tax, that takes their total tax rate to 75%. So that's a huge win for the Exchequer...

rmccue 4y ago
On UK profits only: > BP said its UK business, which accounts for less than 10% of its global profits, will pay $2.2bn in tax for 2022, including $700m due to the Energy Profits Levy.
- LatteLazy 4y ago
  I am not sure you can tell a company to pay 75% of it's profits from other countries in tax. If that other country expects just 30%, that is a 105% tax rate...
  - blitzar 4y ago
    > I am not sure you can tell a company to pay 75% of it's profits from other countries in tax. Of course you can, they already pay tax on offshore earnings. Some countries even make their citizens pay tax on global earnings even when they dont live, work, vote or visit their country (looking at you USA) > If that other country expects just 30%, that is a 105% tax rate... Double taxation agreements exist. Where they dont the tax paid would be a cost .. so 75% of the after tax amount from the other country - i.e 82.5%
    - LatteLazy 4y ago
      A Double taxation agreement means one or both country agrees to forgo some or all the tax they would otherwise demand. That's why the US technically taxes it's citizens working abroad, but in reality collects much less than the official rate. So if we do that for companies, then you are definitely not going to get 75% in the UK and 30% locally...
scott_w 4y ago
As commentators point out, they've been very busy shifting money to reduce their tax bill. Also, 30 + 10 + 25 != 75, so I don't know why the BBC keep repeating this number.
- blitzar 4y ago
  Also ... within the levy, a new ‘super-deduction’ style relief is being introduced to encourage firms to invest in oil and gas extraction in the UK. The new 80% Investment Allowance will mean businesses will overall get a 91p tax saving for every £1 they invest – providing them with an additional, immediate incentive to invest. This nearly doubles the tax relief available and means the more investment a firm makes, the less tax they will pay. Paying the windfall tax means that they had ~£0 of actual "investment" in the UK (or paid an effectively voluntary amount for goodwill purposes).
  - scott_w 4y ago
    I didn't even know that! What still stuns me is the absolute genius in applying this to renewable energy suppliers, too. A Conservative government states its belief that low tax encourages investment so they... increase taxes on renewable providers.
    - blitzar 4y ago
      Well ... my energy supplier - 100% green electricity saw fit to 5x my electricity bill. Wind / solar installed in say 2016 and expected yield X or pay-down the capital investment in Y years have seen massive windfalls and capital effective paid off thanks to the increase in prices. If anything the tax / investment rebate should tax the finished and sold projects who have had massive windfalls while not impacting the companies or projects that are still investing.
      - scott_w 4y ago
        I think there’s also a separate issue with energy prices set at the most expensive one. Honestly, I’m not sure why this is still the case in this climate.

hinata08 4y ago

>Reported record annual profits after oil and gas prices surged last year following Russia's invasion of Ukraine. I'm surprised by how short termed is the strategy to actually keep up with 'market' prices. (which they don't have to do, as their workforce and costs are basically staying the same, hence a hike in price increases profits) They make higher profit now. But how much demand destruction will happen in the long term ? I myself just got an ebike to commute, which comes with a nearly 100% reduction in energy use. And I'm not alone. There isn't any traffic jam anymore to commute to where I work, because remote working is becoming widespread (first because of covid, and now gas prices), so much fewer drivers are using their cars. The local government has eventually passed laws to require landlords to properly thermally insulate homes (within a decade) Trains were scheduled again, and became popular. I no longer hear about someone driving across the country. They would just get a train (which also comes with huge energy savings) I'm surprised because the current hike isn't even fueling demand for EVs (as recharging your EV is now as expensive as getting a full tank in public spots) Ppl are just shifting away from cars and some energy intensive usages, this time.

Maakuth 4y ago
> I'm surprised by how short termed is the strategy to actually keep up with 'market' prices. It's supply and demand in action. Each oil company has limited capacity of production and not much flexibility to increase it in short term. As part of the supply is no longer available, there is less oil available in the market. The market mechanism drives the price up to a level where supply and demand are in balance. So the migration of oil consumers to alternatives is exactly what's supposed to happen in this case. Moreover, a single company does not have a real choice to sell for cheap. First everyone would choose this vendor for their oil needs. But as their stock and production is limited, they would soon run out of oil to sell. Even a cartel or government decision to lower the price does not cut it, because it kills the demand side incentive to find alternatives. Then you'd be in a situation where oil is cheap, but not available.
- makomk 4y ago
  Yeah, it's just that people are unlikely to realise this because the British press has spent the last year or so lying about this for both partisan reasons (most of them hate the party currently in power) and environmentalist ones (there's been a huge campaign to block new fossil fuel production in order to fight global warming which relies on convincing people that the only reason governments haven't done so is because it'd hurt fossil fuel company profits - admitting that it'd actually increase their profits and make ordinary people worse off would get in the way of that).

blitzar 4y ago

They booked loses of ~25bn on Russian projects on the way to making a profit of 27bn for the year. Guessing the accountants wrote down everything else they could to keep the headline number as low as possible.

zelphirkalt 4y ago

All while we are trying to get away from fossile fuels. At least superficially there is a mismatch here, between the profits and some perceived Zeitgeist. Does BP do many other things, besides fossile fuels?

nine_k 4y ago
BP is trying hard to become big in renewables. E.g.: https://news.sky.com/story/bp-blows-away-bid-rivals-with-big-bet-on-wind-farms-12212580 https://news.sky.com/story/bp-blows-away-bid-rivals-with-big... https://www.reuters.com/business/sustainable-business/bp-gambles-big-fast-transition-oil-renewables-2021-09-20/ https://www.reuters.com/business/sustainable-business/bp-gam... https://www.bp.com/en/global/corporate/news-and-insights/press-releases/bp-and-enbw-successful-in-scotwind-offshore-wind-bid.html https://www.bp.com/en/global/corporate/news-and-insights/pre... I suppose they'll put some of this windfall into grabbing an even bigger market share in renewables.
- oblio 4y ago
  The real question is: how big are their profits/profit margins for the new market? Edit: and here is the money quote: > The company acknowledged that its fast-growing clean-energy business - including its solar, EV-charging and wind ventures - continues to lose money. BP does not expect profits from those businesses until at least 2025. https://www.reuters.com/business/sustainable-business/bp-gambles-big-fast-transition-oil-renewables-2021-09-20/ https://www.reuters.com/business/sustainable-business/bp-gam...
  - nine_k 4y ago
    Investment is like that. First you spend on acquiring stuff, like building a large wind farm in the ocean. Then it starts to bring money, and eventually pays for itself. All the time while you are building the wind farm, you are spending more than the installation makes (it makes nothing), so you are losing money.
    - 4y ago

walthamstow 4y ago

> biggest profit in 114 year history I hate stats like this. Of course it's the biggest ever, there is more money in circulation than ever before. You see this in politics a lot, a classic from the Teresa May era was "there are more kids going to schools rated Good by Ofsted than ever before." There are more kids alive than ever before, so it's not much of an achievement is it.

m000 4y ago
Can you explain then why our private bank accounts didn't see the biggest annual growth ever? There is more money in circulation than ever before!
- suddenclarity 4y ago
  I don't agree with the orginal statement because increased revenue doesn't necessarily equal profit but a simple explanation to your question is that the amount of humans increase. This results in increased demand bur doesn't mean that every person gets more. Similar how GDP has been increasing in Sweden for a long time but GDP per capita hasn't.
- abigail95 4y ago
  It did? Personal savings has the same "covid spike" in the graph as many other metrics do.
- ddtaylor 4y ago
  Most metrics do actually go up right now because of the massive inflation and the massive amount of money that was printed with the stimulus. I wouldn't argue that people are " richer" because they're purchasing power has been massively eroded, but across the board the numbers have went up technically.
- Am4TIfIsER0ppos 4y ago
  Inflation is designed to steal your money in a way other than taxation.
- deleted 4y ago

clouddrover 4y ago

> The company's profits more than doubled to $27.7bn (£23bn) in 2022, as energy prices soared after Russia invaded Ukraine. Ah, the 34th Rule of Acquisition: War is good for business. https://memory-alpha.fandom.com/wiki/Rules_of_Acquisition https://memory-alpha.fandom.com/wiki/Rules_of_Acquisition

fiftyacorn 4y ago

It annoys me that these companies aren't subject to a windfall tax. These profits are driven by the Russian embargos following the invasion of Ukraine The most annoying thing is that when the price slumps again these companies will be back cap in hand for money to decommission their oil rigs

listenallyall 4y ago
> these companies aren't subject to a windfall tax Last year, the government introduced a windfall tax - called the Energy Profits Levy - on the "extraordinary" profits being made at energy companies. The rate was originally set at 25%, but has now been increased to 35%
- SilverBirch 4y ago
  It's a little more complicated than that. First, Oil & Gas in the UK pay 40% corporation tax to start with (30% corp, 10% supplementary), and the levy is on top of that, meaning they're paying 75%. However, there's an "investment allowance" that means most Oil & Gas companies in the UK can shuffle things around to not pay anything, and they're only paying these rates on UK profits which are only a tiny share of their profits.