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Energy crisis

Big Oil isn’t ripping us off

Filling up: don’t blame Shell for the price. Getty

News that energy firms are making monster profits has prompted the usual “shrill complaints”, says Ian King on the Sky News website. It’s important, though, to put these earnings in context. Take Shell. The oil giant made a record $11.5bn between April and June. But that’s what happens when energy prices are so high – in 2020, when the oil price collapsed, Shell lost nearly $20bn. Finding and extracting fossil fuels requires “vast sums of capital”, so a decent proportion of this year’s bumper earnings will be ploughed straight back into the business. As for the idea that the company is taking advantage of British motorists, that’s for the birds. “UK consumers account for a negligible part of Shell’s overall global profitability.”

It’s a similar story with Centrica, which made a tasty £1.3bn in the first half of the year. Again, this was mostly the result of rising energy prices – operating profits at British Gas, which it owns, actually fell by 43%. The company has been forced to take on, at great expense, around 700,000 customers of energy start-ups that went bust when prices rose. Its average annual profit per household customer is a measly £6. People always used to “grouse about banking profits”, until the financial crisis showed that a profitable bank is “infinitely preferable” to a loss-making one. The same is true of energy firms.