Oil giants aren’t government cash cows

According to Labour, solving the energy crisis is really very simple. Rather than funding an energy price cap through borrowing, as Liz Truss wants to do, it should be funded by a windfall tax on oil giants instead. In other words, let’s grab some of more of the gargantuan profits being made by these polluting companies and use it for the social good.

But hang on a minute. Is there really such a bottomless well of money to be exploited? This morning’s profit warning from Shell suggests otherwise. We have been conditioned into thinking that companies such as Shell have been coining it in all year – not least thanks to the foolish remarks by BP chief executive Bernard Looney in February comparing his company to ‘a cash machine’. It’s almost as if he was deliberately trying to goad the government into hitting BP with a windfall tax. The government did indeed oblige, with the then chancellor Rishi Sunak announcing a ‘temporary targeted energy profits levy’ of 25 per cent in May – something shadow chancellor Rachel Reeves chose to ignore when she claimed the government is ‘leaving the eye-watering windfall profits of the energy giants untaxed’.