BP, the United Kingdom’s largest oil company, increased its dividend and increased share buybacks on Tuesday after doubling second-quarter earnings due to strong refining margins and trade. The British energy company reported $8.5 billion in underlying replacement cost profit in the second quarter, which is considered a proxy for net profit.
This compares to a $6.2 billion profit in the first three months of the year and a $2.8 billion profit in the second quarter of 2021. According to Refinitiv, analysts projected BP to earn $6.3 billion in the first quarter.
Following a jump in commodity prices caused by Russia’s invasion of Ukraine, the world’s major oil and gas corporations have smashed profit records in recent months. The possibility of gas supply disruptions has caused wholesale prices to skyrocket, causing energy companies to pass those costs on to customers, driving up residential energy bills by record levels.
Environmentalists and labour organisations have slammed Big Oil’s record earnings and urged the UK government to take substantial steps to reduce the cost of growing energy bills. Following political pressure, the UK government stated in May that oil and gas companies would pay an additional 25% tax on earnings in order to assist consumers with rising costs. However, because the legislation was not fully implemented until July, the tax will not apply to BP and other companies’ earnings disclosed between April and June.
BP also increased its quarterly dividend distribution to shareholders by 10%, boosting it to 6.006 cents per ordinary share. BP shares surged 4% in early trade in London, hovering towards the top of the pan-European Stoxx 600. Year to date, the stock price is up more than 23%. BP’s statistics highlight the sharp difference between Big Oil’s profit bonanza and those facing a rising cost of living crisis.
