The billions in profits announced by TotalEnergies and Shell on Thursday have reignited the debate about unexpected taxes on the thriving energy giants.
As millions grapple with higher energy bills and inflation, calls are mounting for a much higher tax for energy companies that have benefited from price swings.
In Paris, TotalEnergies said rising global oil and gas prices helped it post a massive profit jump in the third quarter.
Meanwhile, British energy giant Shell announced third-quarter net profits totaling $6.7 billion in London.
TotalEnergies’ net income increased 43 percent from the same period last year to $6.6 billion, with record performances for its natural gas and liquefied natural gas (LNG) operations.
The company has now made $17.3 billion through the first nine months of the year, up from the $16 billion in profit it made last year.
Shell’s earnings on Thursday were compared to an after-tax loss of $447 million in the July-September period last year, the company said.
Shell flowed with cash from earnings rising to nearly $100 billion and said it would buy back shares at a cost of $4 billion.
Both outcomes will fuel a heated debate about energy companies making sizable gains on price hikes resulting from the Russian invasion of Ukraine.
– The giants press –
In France, the left-wing opposition is pushing for an unexpected tax to fund measures to protect consumers from energy price hikes.
TotalEnergies has been plagued by strikes in France that have left petrol pumps running out.
“Staff are right to demand a 10 per cent wage increase” after TotalEnergies declared recent gains, France Unbowed (LFI) MP Thomas Portes tweeted.
And Patrick Kanner, leader of the French Socialists in the upper house, the Senate, argued that TotalEnergies should play its part in “national efforts to enable the poorest to cope with the inflationary crisis”.
However, President Emmanuel Macron reiterated his opposition to such a measure in a prime-time television appearance on Wednesday evening.
In the UK, Greenpeace UK has made similar arguments against Shell.
“A reasonable tax on Shell’s reported Q3 earnings plus the billions made in Q1 and Q2 by all the fossil fuel giants would have already generated enough money to insulate thousands of homes,” said Charlie Kronick, Senior Climate Advisor at Greenpeace UK.
“Response to the cost of living crisis is well within government control.”
Britain’s new prime minister, Rishi Sunak, unveiled a windfall tax on UK energy companies’ profits earlier this year when he was finance minister.
But activists say it was far too small.
– One Time Bonus –
TotalEnergies reached a collective agreement with most unions, but one held out and two refineries continued to strike despite the government forcing some workers to return to work under threat of jail time.
The company also announced it would pay its employees a bonus, “an exceptional one-month salary bonus in 2022 to all of its employees worldwide,” it announced on Thursday.
Shareholders also receive 35 to 40 percent of the cash flow and a higher interim dividend than last year.
French Finance Minister Bruno Le Maire welcomed the company’s record profits, saying it would allow TotalEnergies to maintain its current reduced prices at gas stations.
“When a French company is successful, we should all be happy with its success and proud to have a big energy company like Total,” he told BFM Business Television.
But the French Multinationals Observatory argued on Thursday that TotalEnergies, which they say pays virtually no taxes in France, should really be paying between $40 million and $65 million in taxes this year.
Although oil and gas prices have cooled recently, they are still much higher than before Russia’s invasion of Ukraine began in February.
The war was not only a blessing for TotalEnergies, which was involved in several gas projects in Russia.
It recorded a new impairment of $3.1 billion related to its operations there, after taking write-downs of $7.6 billion in the first two quarters of this year.
Despite slower global growth next year, TotalEnergies expects a two-million-barrel-per-day cut by the OPEC oil cartel and its allies to prop up prices, as well as a European ban on Russian oil imports to come into effect next month.
