Bills rise again to cover energy bosses’ £6bn windfall
Energy firms banked over £6bn in war windfall profits this year, more than £200 a household, days before Ofgem's next price cap rise.
Households bracing for another rise in their energy bills next month are paying for a war they have no stake in. Analysis published today by the End Fuel Poverty Coalition found that BP, Shell, Centrica and five other major energy firms have made more than £6bn in windfall profits from the Iran conflict this year alone, equivalent to over £200 for every UK household.
Ofgem announces its next price cap on 26 August, covering October to December, and it is expected to rise again on the back of wholesale gas prices the regulator itself has already tied to the Middle East war. The companies behind the £6bn figure, BP, Centrica, Chevron, Equinor, ExxonMobil, Iberdrola, Shell and Total, posted combined global profits of £95bn this year.
The energy bills windfall profits behind the price rise
This is not a new pattern so much as an accelerating one. The war between the US and Iran, now roughly six months old, has killed more than 3,500 people and choked shipping through the Strait of Hormuz, stranding 1,600 vessels. Brent crude spiked to around $107 a barrel as a result. Ofgem’s cap for July to September already rose 13% for a typical dual-fuel household, a jump the regulator explicitly blamed on “higher wholesale gas prices, caused by the ongoing conflict in the Middle East.” The 26 August announcement is expected to add to that.
While bills climbed, the executives running these firms did well. Shell chief executive Wael Sawan’s personal shareholding rose £1.8m to £13.2m. Chevron’s Michael Wirth gained £44m. Harbour Energy’s Linda Cook added £4m, taking her holding to £26m. BP’s Meg O’Neill and deputy chief executive Carol Howle gained £2m and over £500,000 respectively, even as BP moves to sell its North Sea business after 60 years of production. Centrica boss Chris O’Shea’s stake rose over £300,000, as British Gas’s parent company took its cumulative profit since privatisation to more than £56bn. Combined, the personal shareholdings of six oil bosses rose over £30m in five months. Shell alone posted its best quarterly result in four years, £7.3bn in adjusted earnings.
Who pays
A third of households are on the brink of, or already in, energy debt, according to the coalition. Opinium polling puts the number already behind on payments at around 5 million, with another 12 million worried they will fall behind. Suppliers are owed £4.79bn in customer debt. University of York research found 14.3% of single-parent households in arrears on energy bills, against 3.9% of households overall, and 9.5% of Black, African, Caribbean and Black British households behind.
“These price shock profiteers are doing very well out of the Iran conflict, but they are doing little to solve the underlying problems,” said Simon Francis, the coalition’s coordinator. Uplift’s Robert Palmer called the profits “largely a war bonus from the Iran conflict”, adding that ordinary people have “ended up paying a Trump tax as the cost of energy rises.”
Industry figures dispute the word “windfall”. BP says the existing windfall tax, with a headline North Sea rate of 78%, added $539m to its bill last year and is why it is quitting a basin it has worked for six decades. That is a real trade-off. It does not explain why bosses’ personal wealth rose in step with the bills their customers cannot pay.
Prime Minister Andy Burnham, who took office last month, has so far declined to say whether he will act. On the North Sea and windfall tax question, he has said only that he has “not completely made a view” and is “listening to what people are saying.” The coalition wants a windfall tax on war-linked profits to fund household support and renewables. Ofgem announces its decision on 26 August.
