Shell announces highest-ever annual profit of $40 million

Oil and gas giant Shell’s profit has doubled since the previous year. Such money has been made at a time when the working class faces growing levels of poverty with rising prices and years of stagnant pay.

In demonstrating the outrageous inequality brought about by our current economic system, this news has prompted many to call for a proper tax on Shell and the other big companies in the energy sector. While this would be no bad thing, much more will have to be done to take on the capitalist crisis of growing poverty for the masses, and growing profits for the capitalist elite.

Shell recorded a total of £32.2 billion in profits in 2022, the most money made in the company’s 115 year existence. Much of this can be attributed to the rise in oil prices since the escalation of the war in Ukraine, however to simplify the matter down to just this conflict would be inaccurate.

Though Shell’s profit margins certainly benefit from the war, other factors need to be taken into account. For example, the company is able to do away with much of its UK tax obligations by offsetting decommissioning costs and any investment into UK projects against its UK-made profits.

Then of course there is the fact that the workers at Shell don’t see the benefits of the company’s great profits: as RMT General Secretary Mick Lynch highlights, “pay and conditions for the thousands of offshore oil and gas contractors who actually do the work to keep oil and gas flowing from under the North Sea have not improved much since the collapse of the oil price in 2014, since when over 200,000 jobs have been lost.”

In the same statement, Lynch said “Profits and dividends on this scale, when millions of people cannot heat or eat a square meal in their homes, demonstrates the remorseless and unjust nature of this industry.”

This deepening inequality cannot be allowed to go on, in the energy sector, or across the economy. For many, including TUC General Secretary Paul Nowak, it’s time for a proper windfall tax:

“As households up and down Britain struggle to pay their bills and make ends meet,” says Nowak, “Shell are enjoying a cash bonanza. The time for excuses is over. The government must impose a larger windfall tax on energy companies. Billions are being left on the table.” Nowak isn’t wrong, however an increased windfall tax does not go far enough. It adresses the consequences of an unequal economic arrangement, but it doesn’t work to change this arrangement in the first place.

The utility companies, and energy giants like Shell, blame the massive rise in our bills on Russia, or the consequences of Covid-19. They will unlikely ever admit that they ultimately chose willingly to raise prices, that they saw an opportunity to make greater fortunes at the workers’ expense and took it. This should come as little surprise, it is necessary to chase ever greater profit to survive as a company under capitalism.

This is why a larger windfall tax won’t be enough. To tackle the root of this outrageous inequality, it would require kicking the private companies out of the energy sector entirely and putting their assets under public control. The energy we need to power our countries and heat our homes should be a right to be guaranteed, not a commodity to profit from. Only with a publicly owned energy sector, under a socialist system, can this be ensured.

Mia English, is the Challenge News Editor

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