Tuesday, October 04, 2022

WAIT, WHAT?

Shell CEO Calls For Higher Taxes To Protect Consumers

The current energy crisis cannot be left to the roiled market to sort itself out and will need smart government intervention by taxing the wealthier to shield the most vulnerable consumers, according to Shell’s chief executive Ben van Beurden.

“One way or another there needs to be government intervention,” van Beurden told the Energy Intelligence Forum in London on Tuesday.

 “A government intervention that somehow results in protecting the poorest, that probably may then mean that governments need to tax people in this room to pay for it,” van Beurden said.

Last month, the European Commission, for example, said it would propose a revenue cap for companies producing electricity at a low cost and a “crisis contribution” from the extra profits of fossil fuel companies in a plan to raise $138 billion (140 billion euros) to cushion the energy crisis blow to European citizens and economy.

“These are all emergency and temporary measures we are working on, including our discussions on price caps,” European Commission President Ursula von der Leyen said in the middle of September. 

At the London forum today, Shell’s van Beurden expressed doubts that oil and/or natural gas price caps would work and incentivize large LNG traders such as Shell itself to deliver more gas to customers.

“I struggle with understanding how effective an oil price cap on Russian oil will be,” van Beurden said. 

“Intervening in complex energy markets is going to be very difficult. Governments need to consult with market experts on what they can and cannot do in terms of interventions,” he added. 

A price cap on gas would be even more challenging, according to Shell’s outgoing CEO who is stepping down at the end of this year.

Van Beurden sees protecting the most vulnerable consumers as the better approach than a market intervention which will face tremendous challenges in its implementation. 

Moreover, a price cap on gas would make Shell’s and other traders’ efforts to bring more LNG to Europe much more difficult.= 

“We will do our best to bring gas to Europe where it’s needed, but if the market signal is not there it’s going to be really challenging,” said van Beurden.   

By Michael Kern for Oilprice.com


Shell CEO calls for energy taxes to help poorest


Ben van Beurden: a need to protect the poorest

Shell CEO Ben van Beurden has called for Liz Truss’s government to impose a windfall tax on the energy giants to help the vulnerable in society.

Speaking at an energy intelligence forum in London, he said European governments should tax corporates to help weaker parts of society cope with soaring energy costs.

The EU last week agreed emergency measures to impose a levy on energy firms’ profits.

Mr van Beurden said that European energy prices and the huge volatility in the markets threatened broader social instability.

“There needs to be government intervention… intervention that somehow results in protecting the poorest,” he said.

“You cannot have a market that behaves in such a way … that is going to damage a significant part of society.”

“One way or another there needs to be government intervention that somehow results in protecting the poorest,” Van Beurden said. “That probably may then mean that governments need to tax people in this room to pay for it.”

The company later clarified that he was referring to companies not individuals.

Energy firms such as Shell have made billions from rising wholesale energy prices since Russia invaded Ukraine. Former Chancellor Rishi Sunak was pressured into introducing a windfall tax in May, but Prime Minister Liz Truss has ruled out extending it.

The levy will raise £7 billion in one year, which will help to pay for the £400 subsidy to household energy bills.

However, the UK Government spokesperson said it has been clear that it “wants to see the oil and gas sector reinvest its profits to support the economy, jobs, and the UK’s energy security.”

Susannah Streeter, a market analyst at broker Hargreaves Lansdown, said: “Shell’s boss has flung open a door on a windfall tax which the UK government had been trying to close.”

Georgia Whitaker, of Greenpeace UK, said: “When the boss of Shell is backing a windfall tax, it makes you wonder what it’s going to take for the government to make a withdrawal.”

BP boss Bernard Looney, who once described the business as a “cash machine”, admitted in July that a windfall tax would not affect its investments in the North Sea.

Brent Crude oil has fallen from $120 per barrel in May to about $90.


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