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Extraordinary profits enjoyed by BP. I think I gave you the level of profits at the start of the show
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It's a vast amount of money. £366 a second is what they're bringing in, and their profits are £2.4 billion
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And the chief executive, who's fairly new in post, Meg O'Neill, could be looking at a £13.7 million pay packet this year
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including £8 million for reward. Now, profit for me is not a dirty word
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I love profit. Profit means that companies can hopefully invest more and employ more staff
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But is there a level? This is Michael in Kent saying, BP are surely just following the Labour government's example
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They're profiteering from Iran. Unlike other governments, they're rubbing their hands in glee
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with glee as the money pours in rather than reducing taxes in fuel
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What was your first thought then when you saw these profits, Robert? it? Yeah, I mean, I think it is a real contrast to people around the country who are getting their
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energy bills through. And they're really thinking about how they're going to pay them. And we know
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that energy bills are going to go up again in July, people's petrol bills are going up
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mortgages are going up. So you know, people are really suffering. And at the same time
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a big oil and gas company like BP is making huge, huge profits. And I think what this is really
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telling us is our current dependency on oil and gas in this country is making all of us poorer
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except for the shareholders and bosses of companies like BP. They would argue back to you, say, hang on a second. Yes, we've done well at this point
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but we can still be subject to the vicissitudes of bombings of oil installations and the like
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and we pay essentially 78% oil tax. The structure of that is it combines 30% corporation tax
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10% supplementary charge, 38% energy profits levy, which lasts until 2030. Can we take much more from them
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Well, I mean, that tax is only on the oil and gas they produced here in the UK
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And a lot of the profits they've been making recently are on their global oil trading business
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So this is direct profit from the war in Iran. And I think this is just showing, of course, you know, an oil company like BP is going to want to try and make as much profit as it can
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But I think it is just showing yet again the cost on ordinary people of our dependency on oil and gas
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And like the real fear that people are going to have around the country when they open their bills as prices go up
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And really the only way in which we bring down prices over the long term ensure that we have secure energy and also don wreck the planet is going as fast as we can towards renewables So do you because this is the kind of thing the Chancellor has said it exactly these kind of profits are exactly why we extended the energy profits levy which I just mentioned to make sure that the windfall profits could be taxed appropriately
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She's saying this, this war profit is being windfall taxed. Yeah, so as I said, you know, the profits they're making in the UK on UK oil and gas
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production will be will be taxed on the windfall tax. I mean, in some ways, the kind of conversation
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about tax kind of gets away from the kind of bigger affordability crisis that is out there
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in the country and is only going to get worse. You know, we've only started to see some of the
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impact of the war in Iran and what's happening. And so, you know, we can have a debate now about
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what the right level of tax is for someone like BP. But it's brighter than that in your view
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Exactly. But like also the bigger picture is I'm just like, again, coming back to people sitting
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at their kitchen tables and opening bills and being like, how am I going to pay this
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And so the contrast of an oil company making loads of money, that's pretty ghouling
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But what we need to do in the long term is fix our energy system so we are not dependent on, as you say, the ups and downs of the global oil and gas market
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And instead focus on homegrown green energy. You know, the UK is a real leader
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We've just had one of the biggest offshore wind farms switch on their first amount of renewable power
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which will generate power for three million homes across the country. Like, we're doing this. The UK is a world leader
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And I think, like, as I said, what this is showing yet again is the only people who are really benefiting from our reliance on oil and gas is the oil and gas companies
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It's making all of us poorer. In a social media post, your colleague Ed Miliband wrote, profiting from a crisis is morally and economically wrong. Is he right
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Of course he's right, yeah. I heard that figure yesterday when I was coming in to work. So I heard the figure on the radio
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Absolutely staggering, to be honest, when everybody is struggling with the cost of living crisis, but particularly the cost of petrol at the pumps
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But I thought you were going to crack down on profiteering. I've heard that from both the Chancellor and the Prime Minister
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And clearly these figures appear during the Iran conflict, so how come they can do it? Where's the crackdown
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Well, that's why we have the windfall tax. And I think Ed Miliband, who's the relevant Secretary of State
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said yesterday, we have the windfall tax and it will apply. So, you know, we won't just be letting these big corporations profit from the war
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They will be hit by... Why has he taken the post down, then? I didn't know he had taken the post down
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Yes, he subsequently... I wonder if it's because, of course, BP is a UK-listed company
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Is it right for the British government to go after UK-listed companies the size of BP
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and declare that they're morally and economically wrong, Secretary of State? The windfall tax exists and we brought it in because you have the energy companies the oil companies making profits way in excess of what they were anticipating doing I think it right to claw the excess profit back not their normal profits
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and then use that to help people with the cost of living crisis. That's why one of the reasons people have just seen £100 cut in their energy bills this month
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Two of the top five oil companies in the world are listed here in the United Kingdom
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Should we have a government that's hostile to them? Talk about one of them being morally and economically wrong
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No, it's not being hostile to energy companies to put a windfall to..
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If they're making profits that are way above their own expectations, then families are facing a cost of living crisis
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I think it's right to use those excess profits to support families through difficult times
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How much profit is too much profit? Is Mr Miliband, Secretary of State Miliband, broadly right in what he's saying
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Morning to you. Good morning, good morning. Well, part of me rather wished I'd bought some shares in BP before this happened
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Yes, yeah. When it comes to this, I mean, obviously, I mean, the minister's not understanding windfall tax is quite concerning, to be perfectly honest, because, yes, the profits that they're making here are not going to be taxed in the same way
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They're not going to be part of that. My issue here is that I'm surprised that people are surprised that companies are making money from war
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I mean, war profiteering is as old as warfare itself. That's my first point
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My second point really is this really highlights the need, the necessity now for our country to look at energy security in a serious way, not in an ill thought out, turn the tap off immediate sort of knee jerk reaction, which some parties are considering
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No, we need to do this in a pragmatic way. We need to, of course, look at renewables, but we mustn't forget the use of fossil fuels as a bridging technology to get us to where we want it to be
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So we've got to start looking at the North Sea more. But we can't put solar power in our tanks, in our vans and our buses and our cars, of course, Professor
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No, we can't. And which is why we need a huge amount of cheap, clean fuel
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And the only way that we can really achieve that is nuclear. And that is the elephant in the room
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And if we have that amount of power that is clean and cheap
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then we can start really looking at electrifying our infrastructure. Before that happens, I'm afraid it's just pie in the sky
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Oil companies like to say that they try and polish their green credentials. They are looking at other sources of power
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This is a world you study. This is a world you lecture in. How valid are those claims
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I mean, I'm not taking anything away from the oil companies. They are doing their... They are looking at that
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They are looking at different ways of producing fuel, making it more green
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But fundamentally, they are a business that makes money from extracting fossil fuel
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So we should not be surprised when they make a lot of money from a crisis
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which is meaning that they can make more money from extracting fossil fuel Always enjoy speaking with you Thank you Professor Christian Dunn environmental scientist commentator at Bangor University Listening to that Alex Brummer who award city editor
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and chief economic commentator for the Daily Mail. Alex, a question I didn't think I'd ever ask you, sir
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Can there be too much profit at a time? Good morning. Actually, I don't think there can be too much profit
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because you have to ask yourself what happens to that profit when it's earned
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Well, people will focus obviously on the bonuses for the executives and they will be outrageous and they probably are too high
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But a lot of that money will come back to you and I for our pension funds and for our insurance returns and so on
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So we'll be beneficiaries. But I think in the long term, it's important that BP as a big independent UK company earns this kind of money
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People have got very short memories. It was only last year that BP was so weak because it had so much debt
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It sticks on, I think, £28 billion of debt that it almost went bankrupt
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And indeed, there was a suggestion that it would have to merge with either Shell or Exxon or one of the other big oil companies to survive
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So it needs this money to pay down some of that debt too and to continue investing in fossil fuels
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Alex, I hear you, but OK, some of it is coming back for the LBC listeners and the readers of the Daily Mail
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but they're forking out for more for their unleaded and diesel at the same time, Alex, when they go to the forecourts
10:03
I think there's an economic misunderstanding here about how oil companies work
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And I don't want to get into the technicalities too much, but the upstream where they actually drill and earn the oil
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and the downstream where they actually sell the oil are very different businesses
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and the downstream business is in a competitive market. They're not allowed under monopoly and competition law
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to subsidise the downstream from the upstream. And so the downstream is set by the global markets
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and that's not their particular problem and they can't subsidise from one to the other
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Lastly, a word on... We heard from the Chancellor that they were... And indeed, actually, the Prime Minister
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they would crack down on any profiteering. doesn't seem to be any action
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Are they likely to deliver on that promise, Alex? Well, I think that there will be a big temptation
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particularly at this time, just before the local elections, for ministers to come out and say
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this is a chance to really crack down on the oil companies. But I think in this particular case
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and I'm very sensitive to the financial situation of BB, the fact that it has this large debt
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and also that it is the UK's primary and great explorer. I mean, it is opening five major projects around the world which will keep fossil fuels prices down over the coming years
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So we should be rather grateful for them. And particularly some of these projects are natural gas projects, which are much less polluting actually than oil
