Topline
British energy giant Shell on Thursday reported its highest-ever annual profits, beating expectations and following record announcements from American heavyweights Chevron and Exxon Mobil as the industry capitalizes on energy prices and market upheaval caused by Russia’s invasion of Ukraine.
Shell posted record profits for 2022.
Key Facts
Shell reported an annual profit of nearly $40 billion in 2022, the highest in the firm’s 115-year history.
The figure is more than double the $19.3 billion the firm reported in 2021 and far greater than its previous record of $31 billion in 2008.
The bulk of Shell’s earnings come from its gas operations, which have benefited handsomely from rising energy prices following Russia’s invasion of Ukraine.
Shell chief executive Wael Sawan said the results “demonstrate the strength of Shell’s differentiated portfolio” and the company’s ability to deliver energy “in a volatile world.”
Key Background
Shell is the latest of the world’s energy giants to announce record profits from last year after Russia’s invasion shook global energy markets. U.S. giant ExxonMobil in January announced nearly $56 billion in earnings last year, a record for both itself and for any U.S. or European oil firm. Chevron, another American heavyweight, also posted record profits of $36.5 billion in 2022, more than double from the year before. The same soaring prices that have buoyed the industry have, conversely, hit consumers across the U.S. and Europe hard. Gas prices soared to an all-time high in June, energy and heating bills for homes have spiraled and food prices have soared.
What To Watch For
The disconnect between the record profits for gas and oil giants and soaring costs of living has brought renewed scrutiny on the sector. The appearance of bumper earnings reports throughout the year have reinvigorated debate over what, if any, limits there should be on what profits such companies can enjoy. Democrats and the White House have accused oil companies of hoarding profits from rising energy prices rather than doing what they can to bring prices down. In the U.K. and European Union, record energy profits sparked plans for one-off windfall taxes directed at firms benefiting from rising energy costs, though many have criticized the schemes as not going far enough. The sheer magnitude of Shell’s earnings have led to renewed calls for a tougher windfall tax in the U.K.,
Big Number
$1.9 billion. That’s how much Shell reported in a windfall tax charge on Thursday. The sum is split between the U.K. and EU, though it is not clear how it has been divided.
Further Reading
Profits at world’s seven biggest oil firms soar to almost £150bn this year (Guardian)
Source: https://www.forbes.com/sites/roberthart/2023/02/02/shell-reports-record-profits-as-oil-giants-including-exxon-chevron-cash-in-on-sky-high-prices-after-russian-invasion-of-ukraine/