Professor John Barry, above, from Queen’s University writes how the big energy firms have enjoyed bumper profits whilst hundreds of thousands of workers have struggled to pay their bills
“This grotesque greed is punishing the poorest and most vulnerable people while destroying our only common home. I urge all governments to tax these excessive profits and use the funds to support the most vulnerable people through these difficult times.”
Not the words of a left-wing politician or trade union leader, but those of UN General Secretary, António Guterres, calling out the obscene profits made by oil and gas corporations. Profits at the world’s largest fossil fuel companies have soared to nearly £150bn so far this year, and while some of the increase in price has to do with a decline in the supply of Russian oil and gas due to the war in Ukraine, this does not account for the increase in the price which has benefitted these corporations and caused misery for millions of people.
BP revealed its profits had nearly tripled in the past three months, surging to £7.1bn compared with £2.9bn a year earlier. In total, the world’s five biggest fossil fuel corporations saw their combined profits increase to £150bn last year. The figures come as the UK government said it is considering tax rises for millions of households and preparing the population for another period of austerity, with public-sector pay expected to be capped at just 2% while inflation is at 11 per cent, so effectively imposing a nine per cent pay cut on public sector workers such as nurses, care staff and firefighters.
And while a windfall tax has been imposed, this has been set at a low level and has a loophole that undermines the levy by enabling these companies to pay the bare minimum if they invest in more gas and oil projects. Yes, you read that correctly, in the context of the climate crisis, a crisis directly caused by the burning of coal, oil and gas, the UK government is effectively incentivising more investment in extracting fossil fuels.
So the government’s response is both worsening the climate crisis and failing to support people faced with higher fuel bills.
But it sadly gets worse, and the energy crisis has demonstrated the need to urgently transition beyond fossil fuels as quickly and equitably as possible. The reason for this is simple. Energy ‘hides in plain sight’ as the main input that enables and powers our economies, societies and ways of life to continue.
To understand this, see if you can provide an answer to the following question: can you name one thing in the room where you are reading this that has not been made, in whole or part, or transported there in whole or part, without the use of fossil fuels? Hard, isn’t it? The reality is that everything in our modern societies, from the electricity we use, the food we eat, how we heat our homes, how those homes are constructed, how to travel etc, is largely dependent on burning fossil fuels.
In other words, once the price of energy increases, almost everything else increases in price. This is what is driving inflation not wages as some in the right-wing media and right-wing politicians suggest. Wages are chasing prices not the other way around. And so in this way we can see that inflation, the increase in the cost of living, is caused by profiteering in the energy sector (and in other sectors such as food) with companies and governments justifying or explaining price increases by blaming it on ‘the war in Ukraine’.
And even if some of the inflation we are seeing is due to the supply chain shocks of that war, why is it the impact is borne by ordinary citizens having to pay more for essential goods and services, and not shareholders of fossil fuel corporations receiving lower dividends? It is often said that it is only when the tide goes out do you know who has been swimming naked. The cost of profiteering crisis has revealed how vulnerable so many of our citizens are.
The first job of government is to protect citizens, especially the most vulnerable. The UK and other governments in failing to do this not only indicate they would rather let ordinary people suffer than heavily tax or nationalise fossil fuel corporations, but also suggests that perhaps what we are witnessing and experiencing in this cost of profiteering crisis is not a crisis at all. Perhaps it is a robbery.