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BP sees huge profit due to high oil and gas prices

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BP has reported a huge profit for July to September due to high oil and gas prices exacerbated by Russia’s invasion of Ukraine.

The oil giant made $8.2bn (£7.1bn) for the period, more than double the profit over the same three months last year.

BP said it expected to pay $800m in UK windfall tax this year, a levy introduced by the government in May.

The windfall tax – introduced by Rishi Sunak – applies to profits made from extracting UK oil and gas.

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At the time Mr Sunak said the levy – which they have called an Energy Profits Levy – would raise £5bn in its first year.

BP’s sharp rise in profit is likely to lead to renewed calls for the UK government to increase the windfall tax on energy firms.

Last week, BP’s rival Shell revealed that it had paid no windfall tax in the UK because it had invested millions of pounds. But it said it expected to start paying the levy next year.

While BP is set to pay some windfall tax, it will also give its shareholders a boost by increasing its dividend payment by 10%, and will also spend $2.5bn buying back shares.

BP’s profit for the quarter was much higher than analysts had expected but dipped from the previous three months due to a fall in the wholesale price of oil.

Oil and gas prices, which began increasing once Coivd restrictions eased, accelerated after Russia invaded Ukraine in late February, resulting in huge profits for energy companies.

On Monday, US President Joe Biden urged major oil firms who are bringing in big profits to stop “war profiteering”, threatening to hit them with higher taxes if they don’t increase production.

Higher energy prices have also fuelled the rise in gas and electricity bills for both households and businesses.

The government is limiting the impact through the Energy Price Guarantee scheme but instead of lasting for two years as originally planned, it will now end in April.

BP profit

There have been warnings that typical household gas and electric costs could reach more than £4,300 when support is scaled back.

The price of energy has also been a major driver of inflation – the rate at which prices rise – which is currently 10.1%.

For the year so far, BP’s global profits jumped to $22.8bn compared to $8.7bn for the first nine months of 2021.

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