Climate protesters target Shell in Pittsburgh, United States (Picture: Mark Dixon)
Planet killing oil and gas company Shell stole its highest profits in its 115‑year history last week. The firm’s profits rose to an astonishing £32.2 billion in 2022—more than double those of the previous year.
That is £3,675,799 an hour, or £60,882 a minute, or £1,021 a second, of crude profit.
In a remarkable piece of tone deafness, Shell chief executive Wael Sawan said that these are “incredibly difficult times—we are seeing inflation rampant around the world”. He added that Shell was playing its part by investing in renewable technologies.
Shell is based in Britain but operates in 70 countries and produced the equivalent of 2.9 million barrels of oil per day last year. It is one of the biggest producers in the North Sea.
The company won’t say how much of its profit was generated in the North Sea. Not only is that dubious, it has real consequences for its remarkable tax avoidance. All energy firms are getting much more money for their oil and gas than they were previously, because of rising demand after Covid. The Ukraine war has lifted prices further.
While profits are up, so are the dividends to the shareholders—money they give directly to the rich. And Shell has been spending billions buying back its own shares from the market, in order to increase their value. A legitimate scam for the capitalists.
Meanwhile the Tories introduced a windfall tax and Chancellor Jeremy Hunt announced this would increase to 35 percent from January. It sounds a lot but only applies to “excess profits” on extracting oil and gas here. Not from refining oil and selling petrol and diesel or exploiting other places’ resources. And the reality is even less impressive. The scam lets firms claim tax savings worth 91p of every £1 invested in fossil fuel extraction.
Shell initially said it was not expecting to pay any of the windfall tax at all for 2022, as its investments in the North Sea meant it did not count as having made any profits. This month it announced that it would actually pay £108 million for 2022. BP said it would pay £678 million for 2022.
However, since we don’t even know exactly how much profit these companies make from extracting oil and gas in Britain, we have to take their word for it on how much the tax should be. And oil and gas firms operating in the North Sea are taxed differently to begin with. They are supposed to pay 30 percent tax on their profits and a supplementary 10 percent rate on top of that. Other firms pay profit tax at 19 percent.
But—and it is a very big but—oil and gas firms have been able to reduce the amount of tax they pay by factoring in any losses real or imagined. And decommissioning North Sea oil platforms is tax deductible—including predicted future costs.
So whatever the rate of tax is, the harsh fact is that BP and Shell have paid next to no tax in recent years. BP and Shell both received more money back from the government than they paid every year from 2015 to 2020. Except 2017, when Shell paid a bit more than it received.
Shell also paid a negative amount of tax in 2021, taking its total since 2015 to -£685 million of tax. BP paid more money in tax than it received back in 2021, taking its total since 2015 to £107 million.
More than 11,000 people in Nigeria’s oil‑producing Niger Delta have filed a claim for compensation against Shell at the High Court. The long-running court case is set to test multinational companies’ responsibility for environmental damage overseas.
The claim from members of the Ogale people adds to one brought by members of the Bille people in 2015. It brings the total number of villagers seeking compensation from Shell to 13,652, according to their lawyers, Leigh Day.
Oil spills from Shell’s operations in the region contaminated drinking water, harmed air quality and destroyed farmland and fishing stocks. A ruling by the Supreme Court in 2021 said that Shell could be held legally responsible in a British court.
The claims are the latest in a string of court cases against Shell over its record in Nigeria. They could establish precedent for the responsibility of international oil and gas companies for past pollution. That is why the oil giants fight these cases so hard
Shell has been central to stealing oil from Nigeria. It struck oil in the Niger Delta in the late 1950s and the company still profits from it. Billions of pounds worth of oil were extracted, but the Ogoni people living in the region saw no benefit.
Shell produces almost 40 percent of Nigeria’s oil from more than 1,000 wells. The struggle against it was met with brutal repression, including the execution of Ken Saro-Wiwa and eight other members of the Movement for the Survival of the Ogoni People in 1995.
Shell is perhaps now trying to dump its Nigeria operations. But it wants to get out with no cost such as the £1.64 billion fine awarded by a Nigerian court for an oil spill in a different case.
Royal Dutch Shell was formed in 1907. Henri Deterding led the company. It did well by supplying oil to armies in the First World War and it got Deterding a knighthood.
Shell was also by far the biggest foreign player in Russia, with a fifth of the country’s oil production. After the Russian Revolution nationalised the oil industry and expropriated the company’s assets Deterding wanted a crusade against what he called “the murderous anti-Christ Soviet regime”.
Shell tried everything in order to uphold an imperialist blockade against the new workers’ state in Russia, including providing free fuel to the ships of invading armies. They even tried to break the Russian economy by printing fake money.
Deterding’s commitment to crushing workers was such that he became a committed Nazi. Shell and Deterding supported every fascist regime in Europe in the 1930s.
In 1936, he moved to Germany to fulfil his fascist dreams. He goose‑stepped down as the head of Shell but remained on the board of directors till his death.
Everyone’s tanks needed petrol so the next world war was good for Shell. In the post war carve up it mobilised private armies when necessary. In one case it borrowed the Dutch army to crush a strike wave as it went about polluting whole areas of the earth in the search for more to steal and profit from.
Beyond the well-known carve up of the Middle East, Shell propped up the racist Rhodesian regime in the 1960s. Then British head of Shell, Sir Frank McFadzean, got the company to smuggle oil to Rhodesian racists. Later when sanctions were imposed on South Africa Shell continued to provide 80 percent of its oil.
As Shell hoovered up billions while destroying the planet, the bosses offered, “We believe that Shell is well positioned to be the trusted partner through the energy transition.”
By this they mean that Shell’s investments in the division Renewables and Energy Solutions were £2.8 billion out of a total of £20.4 billion or 14 percent of their investments. But Shell’s renewables and energy solutions include the trading of piped gas and power, so it isn’t even that green. And even that lip service to the planet is being pulled back by oil companies.
They are all cutting back on their renewable energy plans since there is now loads of cash to be made in oil and gas price hikes. And now Shell is also using the cutting back on investment in renewables as a threat to argue against keeping any windfall taxes.
Shell is just one part of a capitalist death cult. It exists purely for the accumulation of profit. Along the way it will exploit workers and drive the planet to destruction as a central part of the fossil fuel industry.
It is not enough to make them pay tax. Nor is it enough to nationalise the fuel corporations. We have to take on and destroy their system before they destroy us.
ExxonMobil last week reported a £46 billion profit for 2022, the highest annual earnings for a Western oil company, after US rival Chevron made £30 billion.
BP and France’s TotalEnergies are due to report this week and are expected to bring the total profits of 2022 to almost £165 billion.
Three million people on low incomes were unable to heat their homes during last December’s freezing temperatures. The Resolution Foundation think tank estimated last month that the energy bills of a typical household in 2023-24 will be 423 percent higher than in 2022-23.
The changes in the support schemes on offer from the government are a significant part of this. The government’s energy price guarantee, which limits the amount suppliers can charge, will rise in April from £2,500 to £3,000 a year. And the energy bills support scheme, which saw households receive £400 off their bills is due to end in March.
This is about to create yet another crisis as even more people won’t be able to pay their bills. The Times newspaper last week revealed British Gas routinely sends debt collectors to break into customers’ homes and force-fit pay-as-you-go metres, even when the customers are known to have extreme vulnerabilities.
British Gas has since been forced to suspend its contracts with firms that did this. The customers can then only use their supply if they top up or through a smartphone app. They charge a higher tariff and when you do not top up the heating is cut off.
British Gas also takes £6.50 from the top ups as repayments—and hundreds of pounds extra is added to the bill to cover the debt collectors’ costs. There were an extra 60,000 warrants allowing energy companies to force entry last year to a total of to 345,000.
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