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In the News

Energy Economics - BP makes record profits

Geoff Riley

1st November 2022

Yet more news of supernormal profits in the oil and gas industry. BP has announced a surge in profits making $7 billion in the 3rd quarter of 2022.

BP sees huge profit due to high prices

We find that BP breaks even on their oil production when the world price of crude is around $40 per barrel whereas a price in excess of $80 per barrel they effectively become a “cash machine.”

In the UK, energy companies such as BP and Shell pay a total tax rate of 65% on their profits, including the windfall levy.

BP expects to pay £2.17 billion in tax on its North Sea operations this year. Around £700 million of this will be the Energy Profits Levy that came into force earlier this year.

The business has made £20 billion profit so far this year and - in common with many other oil and gas giants - billions have been handed out in dividends and allocated to share buyback programmes for investors. (A share buy-back increases the share price ceteris paribus).

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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