Bumper profits for oil companies fuel fresh calls for 'windfall tax'

The British government was strongly urged on Tuesday to levy a 'windfall tax' on huge, unexpected profits made by major petrochemical companies in recent months.

Supporters of the tax say London could use the money it collects to help United Kingdom residents struggling with an unprecedented cost-of-living crisis that has seen the price of energy and commodities skyrocket, tax on pay packets rise sharply, and inflation soar.

"With so many people struggling to pay their energy bills, we should have a windfall tax on oil and gas companies in the North Sea who have made more profit than they were expecting," Keir Starmer, leader of the main opposition, the Labour Party, told the BBC.

He made the call after BP said its underlying profit for the first three months of this year was $6.2 billion, which was more than double the $2.6 billion it made during the same period last year.

The massive profit was largely down to the extremely high global price of energy caused by increased demand following the easing of novel coronavirus restrictions in many countries, and by the situation in Ukraine and the resulting sanctions many nations have placed upon exports from Russia, which is a major oil and gas producer.

Starmer said BP's underlying profit, which greatly exceeded analysts' expectations of $4.5 billion, "reinforces the case that we've been making" for a redistribution of wealth. He said it is especially important with price inflation at a 30-year high, and with many employers failing to give workers pay rises that ensure they can pay those bigger bills.

Ed Davey, leader of the smaller opposition party, the Liberal Democrats, agreed, saying on the BBC's Breakfast program: "BP is raking in eye-watering profits while millions of people struggle to pay the bills."

But Prime Minister Boris Johnson said the idea would stifle investment and damage the UK in the long run.

"What that means is that you discourage (companies) from making the investments that we want to see; that will, in the end, keep energy prices lower for everybody," he told ITV News.

And BP seemed to respond to his call for more investment, by promising to plow 18 billion pounds ($22.6 billion) into new projects in the nation before the end of the decade.

While London seemed to reject the idea of a windfall tax, Rome said on Monday Italy will raise its windfall tax on energy-industry profits, from 10 percent to 25 percent.

The nation plans to direct 14 billion euros ($15 billion) of the money it hopes to collect toward companies and people struggling with the cost-of-living crisis.

The business news service Bloomberg noted that BP's first-quarter profit, which was its biggest for more than a decade, will be followed, on Thursday, with fellow petrochemical giant Shell unveiling its profit for the period.