Energy companies faced calls for a windfall tax on their profits after British Gas and Shell announced combined £9 billion profits amid rising fuel bills. Campaigners, Labour politicians and the unions said that it was "grotesque" for the companies and their shareholders to be enjoying profits on the back of surging global energy prices, while their customers suffered from record rises. The calls are likely to be taken seriously by Alistair Darling, who is under enormous pressure to deliver a tax break for poorer households.
Prices are high because there\’s less oil and gas around than people want to use, globally: thus prices rise so that supply and demand meet.
We\’d thus rather like people to be going out and looking for more oil and gas. For them to do this they have to raise money: either by using the profits they are already making or by the thought that if they find some they can make profits with which to reward those who invest in them.
So taxing away the profits will lead to less exploration and thus higher prices in the future than there would be without the tax.
At least one company is telling the truth here:
Mr Luff insisted the company needed to keep investors on side. "We are investing huge amounts of money on behalf of our customers. We have to fund that through debt and equity and we need support from both. That is how a market economy works," he said.
And at least one person is being a stupid, stupid bastard.
Tony Woodley, joint leader of the Unite union said that the profits were "grotesque".
He said: "These latest vast profits now put the case for a windfall tax on big oil companies beyond argument.
"The Government should grasp the nettle and do what it did in 1997 by taxing grotesque profits and put the proceeds into helping the millions of people struggling with their fuel bills\’.