Unpacking BP's record profits (against its substantial losses?)!

[Dheepa]

This thread is for the general discussion of the Article Unpacking BP's record profits (against its substantial losses?)!. Please add to the discussion here.

 

[rogerd123]

Very interesting to see how what initially may be interpreted as a "poor" quarterly result can actually be seen as a very good result, once mitigating the situation with the Russian energy company shares.

On a related topic, given extremely high energy prices right now, we will have to see if a 'windfall tax' is introduced by the government, and if so how this would affect BP's returns.

 

[George Maxwell]

Very interesting to see how what initially may be interpreted as a "poor" quarterly result can actually be seen as a very good result, once mitigating the situation with the Russian energy company shares.

On a related topic, given extremely high energy prices right now, we will have to see if a 'windfall tax' is introduced by the government, and if so how this would affect BP's returns.

Hey @rogerd123,

Do you think that the government is likely to introduce a windfall tax? Interested to know whether you think if this is a good idea or not?

 

[rogerd123]

Hey @rogerd123,

Do you think that the government is likely to introduce a windfall tax? Interested to know whether you think if this is a good idea or not?

With more frequent discussions, and Sunak no longer saying a firm 'no', it's looking like they're increasingly likely to.

I don't think it's the best idea, as it compromises the stability and predictability of our tax system, may jeopardise future investment, and would not fix future issues. However, I do think the government needs to implement some sort of tax system to recover some money which can be funnelled back to the people - just not necessarily a windfall tax. I read that the amount of tax breaks the govt gives such companies actually exceeds their annual tax, and they end up getting refunded by the govt - which is ridiculous in light of the current cost of living crisis.

Perhaps we need tax reform which implements a tax rise when prices exceed a certain amount, in a sustainable manner.

What do you think?

 

[George Maxwell]

With more frequent discussions, and Sunak no longer saying a firm 'no', it's looking like they're increasingly likely to.

I don't think it's the best idea, as it compromises the stability and predictability of our tax system, may jeopardise future investment, and would not fix future issues. However, I do think the government needs to implement some sort of tax system to recover some money which can be funnelled back to the people - just not necessarily a windfall tax. I read that the amount of tax breaks the govt gives such companies actually exceeds their annual tax, and they end up getting refunded by the govt - which is ridiculous in light of the current cost of living crisis.

Perhaps we need tax reform which implements a tax rise when prices exceed a certain amount, in a sustainable manner.

What do you think?

Hi @rogerd123,

I would be interested to read the article that spoke about this! Do you have a link to it?

It is looking increasingly likely, I agree. I think this is a difficult one: a windfall tax recognises that a particular industry or sector has benefitted from something that they were not responsible for: they were 'lucky'.

My concern is that this sets a precedent for raising taxes in an unpredictable and potentially arbitrary way. Windfalls happen all the time, and I think I feel uncomfortable with the lack of clarity over when it is appropriate to levy such a tax. I.e., when does a 'windfall' cross the threshold of being inappropriate or unfair, necessitating the imposition of a financial penalty.

I thought that these articles were interesting (all from the perspective of why it is wrong for a windfall tax to be imposed):

• The Economist
• The FT
• The Spectator

@James Carrabino do you have any particular thoughts on this?

 

[rogerd123]

Hi @rogerd123,

I would be interested to read the article that spoke about this! Do you have a link to it?

It is looking increasingly likely, I agree. I think this is a difficult one: a windfall tax recognises that a particular industry or sector has benefitted from something that they were not responsible for: they were 'lucky'.

My concern is that this sets a precedent for raising taxes in an unpredictable and potentially arbitrary way. Windfalls happen all the time, and I think I feel uncomfortable with the lack of clarity over when it is appropriate to levy such a tax. I.e., when does a 'windfall' cross the threshold of being inappropriate or unfair, necessitating the imposition of a financial penalty.

I thought that these articles were interesting (all from the perspective of why it is wrong for a windfall tax to be imposed):

• The Economist
• The FT
• The Spectator

@James Carrabino do you have any particular thoughts on this?

I unfortunately cannot find the exact article anymore; this is one from August 2021 which is along the same lines: https://news.sky.com/story/revealed...es-are-paying-negative-tax-in-the-uk-12380442

I agree with your point- windfall taxes rely on profits passing the 'unfair' threshold, but 'unfair' (as of now) is a subjective term. I wonder how much of the motivation behind the windfall tax (if implemented) is to subdue growing public unrest/for the govt to 'save face', rather than to have a long-term positive impact on the economy.

Thank you for those links! On a side-note, I'd like to point out that the author of the Spectator article you linked works for the International Energy Agency, which has occasionally been accused of being biased towards fossil-fuels.

Although this is an opinion article, this is another option too: https://www.theguardian.com/comment...dfall-tax-energy-companies-bills-uk-consumers

 

[George Maxwell]

I unfortunately cannot find the exact article anymore; this is one from August 2021 which is along the same lines: https://news.sky.com/story/revealed...es-are-paying-negative-tax-in-the-uk-12380442

I agree with your point- windfall taxes rely on profits passing the 'unfair' threshold, but 'unfair' (as of now) is a subjective term. I wonder how much of the motivation behind the windfall tax (if implemented) is to subdue growing public unrest/for the govt to 'save face', rather than to have a long-term positive impact on the economy.

Thank you for those links! On a side-note, I'd like to point out that the author of the Spectator article you linked works for the International Energy Agency, which has occasionally been accused of being biased towards fossil-fuels.

Although this is an opinion article, this is another option too: https://www.theguardian.com/comment...dfall-tax-energy-companies-bills-uk-consumers

Hey @rogerd123,

Thank you for this. I will check out this article now!

I really like how you noticed the author's connection to the industry. You are absolutely right that this potentially undermines the impartiality (and therefore the power) of the article's argument. Although, remember in an interview, you shouldn't discount an article solely because an author has some affiliation which might influence their point of view. This is a great point to mention in an interview though (even to say, if you don't have access to the internet during the interview, "I would be interested to know the background of the author who wrote this article").

Where do you think the line is between a 'fair' and 'unfair' windfall? I will check out the Guardian article now too.

Interesting that the government now have said they will pursue a windfall tax. I wonder what impact this might have (if any) on the industry's willingness to transition to green energy. Ad hoc taxes like this arguably set a worrying precedent which undermines the private sector's ability to invest and plan proactively for the future...