BP posted its largest profit since 2008, thanks to soaring energy prices. The latest forecasts indicated that household bills could rise to more than £3,600 in the winter.
The profit for the oil giant was $8.5bn (£6.9bn), which beat estimates and is three times greater than last year’s second quarter.
BP follows in the footsteps of Shell’s rivals by increasing shareholder returns as Russia’s war in Ukraine causes surging prices to create a windfall for major energy companies.
The company increased its dividend by 10pc, to 6 cents per share, and announced that it will purchase back $3.5bn in shares within the next three months. This adds to the $3.8bn that it purchased back in the first quarter.
This was after consultancy Cornwall Insight predicted that energy bills could rise to £3,615 by the new year, hundreds of times more than originally anticipated.
In October 2021, the average annual bill was just £1,400. However, this number has risen as wholesale costs continue to rise and price caps continue to rise.
Recent forecasts are likely to prompt more support for families. Although the government has promised £400 in support to households to help pay their bills, the price cap forecasts have increased more than £500 since funding was announced.
Strong refining margins, exceptional oil trading performance, and higher fuel prices were the main drivers of this strong performance, BP stated. Gas trading, however, was less successful.
Profits were also affected by an outage at a U.S. Gulf Coast Liquefied Natural Gas (LNG) facility.
Out of a total of 18 million tonnes of LNG, the Freeport LNG plant supplies BP with 4 million tonnes of LNG per year.
According to Chief Financial Officer Murray Auchincloss, the company was able to divert cargoes to customers in order to replenish its supply. However, this came at a high cost that impacted profits.
He said that the company had allocated funds to pay for additional LNG supply costs resulting from the Freeport outage.
