With Britain engulfed in a political crisis and Boris Johnson’s administration winding down, oil industry executives are urging the government to make changes to a windfall tax measure aimed at curbing the ballooning profits of oil and gas companies.
The measure had been announced as a way to help raise about 15 billion pounds, or $17.9 billion, to support low-income households with rapidly rising energy bills. Members of Parliament are scheduled to discuss the bill on Monday. In the United States, a group of Democrats are pushing President Biden to enact a similar policy, but it would face big hurdles in Congress.
Oil and gas companies say charging them a 25 percent tax on profits could deter future investment at a critical time for Britain, which is facing surging energy prices, the DealBook newsletter reports.
“Many of the financial institutions that lend money to our industry see a government that is sending very mixed signals,” said Mike Tholen, the sustainability director of Offshore Energies UK, an industry body. Mr. Tholen, who is seeking a meeting with the new chancellor of the Exchequer, Nadhim Zahawi, to discuss possible changes, said the tax would do nothing to lower gas prices.
Some academics say warnings from the oil industry are exaggerated. Arun Advani, a research fellow at the Institute for Fiscal Studies, told DealBook that the argument from some companies that the tax would cut into their ability to invest in future sources of renewable energy did not hold up because these extra profits were unexpected.
Oil companies are reporting record profits. Shell said it expected its refining profits to nearly triple, adding $1 billion to its bottom line, as the price of oil products surged because of a lack of refining capacity. BP reported its largest quarterly profit in a decade.