The company's profits more than doubled to $27.7 billion in 2022 as energy prices soared following Russia's invasion of Ukraine. Other energy firms have seen similar increases, with Shell, for example, last week reporting record profits of nearly $40 billion. BP shares have risen nearly 20% since Tuesday's results were announced.
High oil and gas prices have had serious consequences in the UK, including double-digit inflation, widespread public sector strikes, increased use of food banks and calls for politicians to impose a higher windfall profits tax on energy companies to fund public services. The tax was originally imposed on energy companies' windfall profits and was set at 25%, but has now been increased to 35%. The tax applies only to profits from oil and gas production in the UK and is in addition to the 30% corporation tax and an additional 10% rate, bringing the total tax rate to 75%. However, energy companies can reduce the amount of tax they pay by taking account of losses or expenses, such as the decommissioning of North Sea oil platforms. BP has announced that its UK business, which accounts for less than 10% of its global profits, will pay $2.2 billion in taxes for 2022, including $700 million attributable to tax on energy profits.
BP has limited its plans to reduce carbon emissions by cutting oil and gas production. Despite being one of the first oil and gas companies to announce its goal of zero net emissions by 2050, BP has now revised its pledge to reduce emissions by 35-40% by the end of the decade to a reduction of 20-30%. The company said that further investment in oil and gas production is needed to meet current demand.
British rival Shell on Thursday reported an all-time high annual profit of nearly $40 billion, after US oil giant Exxon Mobil reported a record $56 billion profit for 2022 and Chevron's profit hit an all-time high of $36.5 billion. According to Refinitiv, the Western world's largest fossil fuel companies are projected to collectively make a profit of over US$200 billion in 2022.