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Soaring gas and oil prices push BP’s profits to an eight-year high

BP's profits

Oil giant BP saw its profits hit their highest in eight years in 2021. Earnings were lifted by soaring gas and oil prices, as the company boosted share repurchases and accelerated plans to cut emissions with increased spending on low carbon energy.

BP’s rebound to an annual profit of $12.85 billion- after reporting large losses in 2020 – is likely to add to calls in Britain for higher taxes on energy producers. This should help reduce consumers’ energy bills which are presently at an all time high.

“It’s all about one thing, one thing only – delivering the strategy that we laid out. That’s working,” said chief executive Bernard Looney to Reuters news agency.

The results were supported by higher oil and gas prices and production, partly offset by weaker oil trading results and the impact of higher energy costs on operations such as refining, the company said.

Natural gas and electricity prices around the world have soared since the middle of last year because of tight gas supplies and higher demand as economies rebounded from pandemic shutdowns.

Europe is battling a record-breaking surge in energy prices that threatens to derail the post-pandemic economic recovery, strain household incomes and even tarnish the nascent green transition.

A series of market, geographic and political factors have coalesced into a perfect storm that shows no signs of abetting as the continent enters the autumn season, temperatures gradually decrease and heating becomes indispensable.

Analysts have warned the crisis, which is exacerbated by a mixture of temporary and structural problems, will be prolonged with the worst feared yet to come.

BP has said it would plough more cash into its low-carbon and renewables business while at the same time reducing oil output in order to cut greenhouse gas emissions to net zero targets by mid-century.

However, as companies like BP reduce spending on new fossil fuel projects, consumers should expect more volatile oil and gas prices, Chief Executive Bernard Looney said.

We can expect more volatility in the coming months and years,” Looney told Reuters.

In the fourth quarter of 2021, BP’s underlying replacement cost profit, its definition of net earnings, reached $4.1 billion, beating analysts’ forecast of $3.93 billion- the largest quarterly profit BP has seen since early 2013.

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