Will Sunak or Truss make booming oil and gas firms pay to help consumers?
BP has done well out of the war in Ukraine. Soaring oil and gas prices that followed Russia’s invasion in February meant quarterly profits have tripled to just under £7bn. Only once, when oil prices hit a record level of almost $150 a barrel 15 years ago, has the energy giant posted higher profits.
It was only two years ago that oil prices briefly went negative in the early stages of the pandemic, but the big energy companies can expect little public sympathy.
News of BP’s bonanza came as the latest estimates emerged of the new energy price cap consumers can expect to come into force this winter and beyond. The forecasts from the research group Cornwall Insight suggest the average household will see their gas and electricity bills rise from just under £2,000 a year to just under £3,500 in October. Further increases are expected in 2023 and the squeeze on living standards will intensify.
This juxtaposition of massive windfall profits and the hardship facing millions of households prompted a furious response from the Labour party, the TUC and pressure groups. Even in normal times, BP profits of this size would raise an eyebrow or two. When the country is facing a cost of living crisis in large part caused by dearer energy bills, they are politically explosive.
No question, Britain has a long-term energy problem born of years of neglect. Too much energy is wasted heating badly-insulated homes and the case for investing more on retro-fitting is more powerful now than it has ever been. If ever there was a case of failing to mend the roof while the sun was shining, then this is surely it.
But there is also a pressing short-term problem. One early decision facing either Boris Johnson’s successor is whether to provide a third package
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