Soaring profits at the energy companies Shell and Centrica have been described as an “insult” to millions of people struggling with the cost of living crisis, with high oil and gas prices funding multibillion-pound rewards for their shareholders.
A day after millions of households were warned that average annual energy bills could hit £3,850 from January, triple the level at the beginning of this year, two of the UK’s biggest energy companies sparked outrage with their bumper profits.
Shell posted record earnings of $11.4bn (nearly £10bn) for the three-month period from April to June and promised to give shareholders payouts worth £6.5bn.
Asked about the stark contrast with the punishingly high bills faced by households already struggling amid sky-high inflation, Shell’s chief executive, Ben van Beurden, said the company could not “perform miracles”.
At the same time, Centrica, the owner of British Gas, reinstated its dividend, handing investors £59m, after reporting operating profits of £1.3bn during the first half of 2022.
Soaring wholesale prices for oil and gas, which have been partly fuelled by the war in Ukraine, have delivered higher income for companies that drill for fossil fuels, while causing misery for motorists and bill payers, as domestic and road fuel prices surge past all-time highs.
“These eye-watering profits are an insult to the millions of working people struggling to get by because of soaring energy bills,” said Frances O’Grady, the general secretary of the Trades Union Congress.
“Working people are facing the longest and harshest wage squeeze in modern history. It’s time working people got their fair share of the wealth they create, starting with real action to bring bills down.”
According to forecasts issued earlier this week, upcoming rises in the energy price cap could result in the average dual-fuel tariff soaring to £3,850 in January, with bills of more than £3,500 – or £300 a month – likely to last “well into 2024”.
If the prediction proves correct, average bills will have risen more than £2,500 in the space of a year.
The government introduced a £400 rebate on bills earlier this year, while the most vulnerable households are entitled to support that could be worth up to £1,200.
Labour has called on the government to go further by scrapping the 5% VAT rate on energy bills, although this would only deliver savings of £98 based on the current price cap, which is set at £1,971.
Ed Miliband, the shadow secretary for climate change and net zero, accused the government of being “asleep at the wheel”, amid a Tory leadership contest that is pitting the former chancellor Rishi Sunak against the foreign secretary, Liz Truss.
“As profits soar to record levels for oil and gas producers, we face a serious and worsening energy bills crisis, far worse even than a couple of months ago,” Miliband said.
He said both Truss and Sunak were “living on another planet” when it came to the “cost of living emergency”.
The Labour MP pointed out that, as chancellor, Sunak had initially opposed a windfall tax on energy companies, before eventually relenting, and had also introduced tax breaks for oil and gas firms, designed to spur exploration for more fossil fuels.
Truss, he added, “appears to believe that the cost of living crisis can be solved by abandoning renewable energy – the cheapest form of power we have. The government is asleep at the wheel.
“They should start by getting rid of the plan to hand £4bn of public money back to the oil and gas giants making record profits in this crisis and using this money to help families.
“To bring down energy bills for good, we need Labour’s plan for a green energy sprint for home-grown power, and our 10-year warm homes plan to cut bills for 19m cold, draughty homes.”
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Earlier this week, MPs on the business and energy select committee called for the energy price cap, introduced in 2019 in an effort to combat profiteering, to be replaced by a “social tariff”.
This would involve the poorest households receiving discounted energy, with the cost funded either through taxation or spread between more well-off bill payers.
The MPs warned that millions of people would be plunged into unmanageable debt without further help from the government.
The Guardian has approached the government for comment.