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Britain’s wealthy energy companies are now part of the problem

The Telegraph

Britain’s wealthy energy companies are now part of the problem

Bosses’ fanatical devotion to showering shareholders with cash has done little to help their own cause as household bills soar

Shell is still on course to return “$30bn to shareholders this year, or more than 15pc of its market cap”. These are truly astonishing sums in any context but set against a backdrop of sharp increases in fuel poverty, they are in danger of looking obscene.

: CHIEF CITY COMMENTATOR

In the cost of living squeeze, Britain’s energy giants have replaced the banks as public enemy number one. Record profits at a time when millions of households are buckling under the strain of soaring bills are not a great look, to put it mildly.

Accusations of profiteering at the expense of the poorest are easy to make for the industry’s harshest critics – campaigners, trade unions, charities, NGOs and the opposition.

Even the Government jumped on the bandwagon, performing a screeching u-turn in the face of intense pressure and imposing a windfall tax on the sector’s biggest names, having repeatedly warned of the dangers that such a move would pose for investment.

The latest round of bumper returns will do little to quell the outrage. The timing is more unfortunate than ever. It comes amid warnings from the National Grid that Britain will be more dependent on imported power from the Continent this winter. Consumers have also woken up to front page news of annual energy bills breaking the £4,000 mark at the beginning of next year.

Having already smashed its own quarterly records just months ago, Shell has now reported record profits for the second consecutive financial quarter – almost £10bn in just three months, and more than double the £4.5bn registered in the same period of 2021.

The likes of Shell might also ask whether its critics are happy for a windfall tax to work both ways. Yes, it is swimming in cash right now, but in 2020 the company posted a heavy $20bn loss and there was certainly no calls for the oil majors to receive generous subsidies back then.

But it is also true to say that the industry has done little to help its own cause. A fanatical devotion to showering shareholders with billions in excess profits is truly puzzling, particularly when under such intense scrutiny.

Having spent $8.5bn on share buybacks in the first half of the year, Shell is buying back another $6bn worth of shares this quarter. And although the dividend remained unchanged at $0.25 a share, RBC analyst Biraj Borkhataria points out that Shell is still on course to return “$30bn to shareholders this year, or more than 15pc of its market cap”.

These are truly astonishing sums in any context but set against a backdrop of sharp increases in fuel poverty, they are in danger of looking obscene. It is a mystery why Ben van Beurden, Shell’s chief executive, feels the need to ramp up total shareholder distributions to “significantly in excess” of the company’s commitment to return up to 30pc of its cash flow.

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