Energy giants’ profits soar amid cost of living crisis

Outrage over Centrica and Shell’s mammoth profits and plans to resume dividend payouts

The price board at a Shell Gas Station displays the unit prices of different fuels in London
Increased pressure on costs such as fuel is being passed on to the consumer
(Image credit: Hesther Ng/SOPA Images/LightRocket via Getty Images)

Centrica’s half-year profits are five times higher than a year ago, with the energy giant’s adjusted operating profit for the six months ending in June up to £1.34bn from £262m in 2021.

At the same time, Shell has recorded record profits of nearly £10bn between April and June, and promised to give shareholders payouts worth £6.5bn. Both companies are benefiting from a surge in energy prices brought about by Russia’s invasion of Ukraine.

Speaking to TalkTV, former Energy UK chief Angela Knight said there was a “big question mark over those who are making extraordinary profits from an extraordinary world situation”.

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Cost of living crisis

While energy companies are posting record profits, ordinary households are struggling to pay rising energy bills.

In April UK energy bills increased by £700 and are expected to keep rising, with analysts forecasting that bills could reach nearly £4,000 a year for a typical home in 2023.

Critics say the government’s cost of living package, which will provide every household in the UK with an energy bill discount of £400 this autumn, does not go far enough to address the crisis.

Speaking to the BBC, money-saving expert Martin Lewis insisted there needs to be more intervention to help with the financial burden facing the poorest households.

“Rishi Sunak, Liz Truss, Boris Johnson, if you’re listening, please, go and sit in a room together, make a collective decision now of what help you can give and make an announcement now to forestall the mental damage that is coming across the country,” he said.

“There needs to be action now.”

Energy giants pay dividends

The Mirror reported that Centrica has “resumed payouts” to its shareholders amid substantial profits, bringing back an interim dividend of 1p per share after scrapping it for the past three years.

The energy giant’s dividend payments are thought to be worth about £59m to shareholders, while Shell announced $1.8bn in dividends on Tuesday.

Paying out shareholders while many people are feeling the pressure of rising bills has drawn some criticism.

Energy analyst David Cox told the BBC that “any oil and gas company... that’s making a profit and giving some of that back to shareholders at this time, will face a backlash”.

Centrica chief executive Chris O'Shea said: “Bear in mind, over the next couple of years we are expecting to pay a windfall tax of probably well over £600m on our UK gas business off the back of the profits that we're seeing, so a lot of this is going back into society.”

The war in Ukraine is at the heart of what is happening to the energy market, with the reduction of gas supplies to European countries “[upping] pressure on global food, petrol and domestic energy costs”, said The Independent.

That pressure is often passed on to the consumer. Faye Dearnaley, a student who lives with her three-year-old daughter in Fife, told the BBC that the situation is “getting ridiculous”.

“My standing charge for gas has doubled,” she said. “My standing charge for my electric has trebled.

“You really are watching every single penny just tick away on your smart meter.”

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