A BP petrol station in Madrid, Spain.
Sopa Pictures | Light flare | Getty Images
LONDON — British oil giant BP on Tuesday increased its dividend and boosted share buybacks after tripling second-quarter profits on the back of strong refining and trading margins.
The British energy major posted a second-quarter profit underlying replacement cost, used as an indicator of net profit, of $8.5 billion.
This compared to a profit of $6.2 billion in the first three months of the year and $2.8 billion for the second quarter of 2021. Analysts had expected BP to report a profit of $6.3 billion in the first quarter, according to Refinitiv.
BP also announced a 10% increase in its quarterly dividend to shareholders, bringing it to 6.006 cents per common share.
BP shares rose 4% in morning trading in London, trading near the top of the pan-European Stoxx 600. The stock price is up more than 23% since the start of the year.
BP’s results once again underscore the stark contrast between big oil’s profit windfall and those grappling with a deepening cost of living crisis.
The world’s biggest oil and gas companies have broken profit records in recent months, following a spike in commodity prices sparked by Russia’s invasion of Ukraine. For many fossil fuel companies, the immediate priority appears to be returning cash to shareholders through buyback programs.
Last week, BP’s British rival Shell reported record second-quarter results of $11.5 billion and announced a $6 billion share buyback program, while the owner of British Gas Centric reinstated its dividend after a massive increase in profits in the first half.
Environmental activists and labor groups have condemned Big Oil’s profit hike and called on the UK government to impose significant measures to reduce the cost of rising energy bills.
“Every family should get a fair price for the energy they need. But with energy bills rising much faster than wages, high profits are an insult to families struggling to get by” said Frances O’Grady, general secretary of the Trades Union Congress, in a statement. .
“For a fair approach to the cost-of-living crisis, price rises and profits must be curbed. Ministers must do more to raise wages across the economy. Energy needs,” said O’Grady.
Last month, a cross-party group of UK lawmakers called on the government to increase the level of support to help households pay rising energy bills and to introduce a national plan to insulate homes.
A price cap on the most widely used energy tariffs for consumers is set to rise by more than 60% in October due to soaring gas prices, taking average annual household bills to more than £3,200 (3,845 $).
National Energy Action, a charity against energy poverty, has warned that if this happened, it would push 8.2 million households – or one in three UK households – into energy poverty. Energy or fuel poverty refers to when a household cannot afford to heat their home to an adequate temperature.
“Ministers must impose a much harsher windfall tax on the massive profits of oil and gas companies. It beggars belief that these companies are raking in such huge sums in the midst of a cost of living crisis,” said Sana Yusuf, an energy campaigner at Friends of the Earth, said in reaction to the BP profits.
“It’s amazing that energy efficiency has been given such a low priority. A national insulation program would cut bills, reduce energy use and reduce climate-altering emissions,” Yusuf said.
The burning of fossil fuels, such as oil and gas, is the main driver of the climate crisis and researchers have found that the production of fossil fuels remains “dangerously out of sync” with global climate goals.
Speaking in June, UN Secretary-General Antonio Guterres called for the abandonment of fossil fuel funding, describing new funding for fossil fuel exploration as “delusional.”