Energy giant Shell announced profits of £9.5bn as householders struggle to pay their bills. The second quarter result is a record result for the firm as the fallout from the war in Ukraine continues to generate bumper earnings for the world’s oil and gas majors.
Following the announcement Shell said it will return billions of dollars to its shareholders. It will buy back £4.9 billion worth of shares from its investors.
Shell's profits are easy to trace, with the price of the barrels of oil it sells rising from 62.53 dollars a year ago to 101.42 today. The rising fuel prices are hitting drivers hard at the pumps while household energy bills are expected to spike to £3,850 in January.
Despite the profits, Shell chief executive Ben van Beurden said 2022 continues to present "huge challenges" for consumers, governments, and companies alike. "Consequently, we are using our financial strength to invest in secure energy supplies which the world needs today, taking real, bold steps to cut carbon emissions, and transforming our company for a low-carbon energy future," he said.
It remains to be seen if gas will need to be rationed in the continent, but with Russia strangling its gas supplies to the region, prices will be astronomically high. It means that Europe will turn to buying gas from elsewhere.
Mr van Beurden said it is a "very uncomfortable" position because Europeans will be outbidding other countries to attract the world's limited number of liquid natural gas (LNG) shipments. "There is not a lot of spare capacity of LNG in the world, it's not like oil where somehow we have a reservoir of spare capacity that can be brought to bear," he said.
"What really needs to happen is if we in Europe want more LNG we have to take it away from those who are getting it at the moment." He said that fortunately LNG demand from China has not yet recovered to pre-Covid levels, so that gas is "fair game".
He added: "But of course if we really have to supply a lot more into Europe to deal with the tightness that may come in the winter, we will have to significantly, as a world, eat into LNG supplies that would otherwise go to an economy that also needs them." The alternative for many of these countries, he said, will be to burn more coal.
Labour's shadow climate change and net zero secretary Ed Miliband said: "As profits soar to record levels for oil and gas producers, we face a serious and worsening energy bills crisis, far worse even than a couple of months ago. Yet at the same time the Government is proposing billions in new tax breaks for oil and gas - an obscene decision when families are facing a true cost-of-living emergency.
"Both candidates for the Tory leadership have shown themselves living on another planet when it comes to the cost of living emergency. Rishi Sunak opposed the windfall tax tooth and nail and has introduced a multi-billion tax break for the oil and gas sector while Liz Truss appears to believe that the cost-of-living crisis can be solved by abandoning renewable energy - the cheapest form of power we have."
