The idea of taxing oil superprofits emerges once again

Oil falls below

The energy crisis is raging. She has an impact on citizens, but brings super profits to oil companies. The question now is whether the governments should tax these colossal revenues additionally, for example to support the purchasing power of citizens.

For several months now, energy prices and especially those of oil have increased enormously. In a year, the price of a liter of fuel has risen by 31 percent for gasoline and 39 percent for diesel, a situation resulting from the strong economic recovery and the war in Ukraine, which is putting pressure on the markets. It is clear that consumers and motorists are being hit hard, but the oil companies are rubbing their hands because they have never made so much profit.

Shell and TotalEnergies, for example, recorded billions of euros in profit in the second quarter alone. TotalEnergies achieved a net profit of 5.7 billion euros during this period. Even more striking is Shell, which made a profit of 18 billion euros in the same period, or five times more than in 2021. That is all thanks to the price increases for a barrel of oil (125 dollars today, against 80 dollars in January 2022) or a MWh of gas (200 euros against 62 euros).

Of course, the shareholders of the energy companies in particular benefit from this exceptional financial windfall. They will receive generous dividends. With this in mind, Shell announced a program to repurchase shares for $ 6 billion, following an earlier $ 8.5 billion operation. The same scenario at TotalEnergies, where a new buyback of 2 billion dollars was launched, after an initial action of 3 billion euros in the first half of the year.

They are not the only ones: the small Spanish oil company Repsol is doing the same. The goal: to take advantage of the strong profits to reduce the debt that has risen sharply during the pandemic and increase the return for shareholders.

These gains seem inappropriate at a time of hyperinflation and impoverishment of the population. Despite the exceptional profits, the oil companies say they remain vulnerable. They are burdened by past losses and the situation is uncertain and could turn in the coming months if certain parts of the world go into recession.

Shell CEO Ben van Beurden said: “with volatile energy markets, economic turmoil and the necessary fight against climate change, 2022 will continue to present challenges. Challenges for consumers, governments and businesses.”This brief quote seems to send a hidden message to the governments that are considering taxing the super profits of oil companies – and also of gas and electricity suppliers. The European Commission has already given the go-ahead for this exceptional tax, which is already in force in Spain, Italy and the United Kingdom.

The question is what position Belgium takes in relation to the super profits of oil companies. The situation is rather delicate as the government has benefited from the high fuel prices, in particular through VAT. The excise duties were reduced but on a flat-rate basis, which benefits the government.

With Energy minister Tinne Van der Straeten (Green), the idea of an extra tax is gradually gaining ground. This would come in the form of an exceptional (and therefore one-off) crisis contribution as high as 25 percent of the gross margin. The contribution would be levied on all energy traders, in particular the suppliers, producers and traders of electricity, natural gas and Oil who pay their VAT in Belgium. Tinne Van der Straeten hopes to work out a fiscal project by autumn.

The author: Michel DEURINCK

Michel Deurinck, born in Brussels in 1950, started his career in the Belgian civil service, dedicating over 30 years to public service. Upon retirement, he pursued his passion for journalism. Transitioning into this new field, he quickly gained recognition for his insightful reporting on politics and culture. Deurinck's balanced and thoughtful approach to journalism has made him a respected figure in Belgian media.

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