European energy companies rake in record profits – as sky-high bills squeeze their customers’ wallets

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Soaring gasoline prices are bad news for consumers, but they’re helping big energy companies reap record profits.

UK listed oil and gas major Shell and Centrica utility, reported record quarterly profits this week.

Shell posted quarterly profits of 11.5 billion pounds ($13.6 billion) – up 92% from a year ago – while British Gas owner Centrica hauled 1.3 billion pounds ($1.6 billion).

“It’s no surprise that Centrica and Shell performed very well again this quarter, with earnings translating into a profit of $11.5 billion, a new record for Shell,” said Simon Tucker, chief strategist. ‘Infosys Consulting. “Clearly we are in a commodity super cycle right now with limited supply and high demand – and will likely be for the next three to five years.”

European natural gas, coal and electricity prices have surged this year, largely due to disruptions in fuel supplies from Russia, which alone supplies around 40% of Europe’s gas needs. the region. EU sanctions on Moscow over the war in Ukraine have shut down major sources of energy supply, pushing inflation to multi-year highs, crushing consumers but providing a boon to suppliers fuel.

And it’s not just UK energy companies that have seen their profits soar.

“We expect European gas prices to rise again in the summer of 2023, as price-driven demand destruction once again becomes a priority,” said a team led by the head of research. on the bank’s natural gas, Samantha Dart, in a recent research note. . “A more sustained lower price environment is not likely in Europe in our view before 2025.”

But the record profits come as consumers grapple with soaring fuel prices.

Analysts have called on oil and gas companies to reinvest sky-high profits to help boost supply, which could be a way to ease Europe’s energy crisis.

“Every effort should be made to reduce power consumption and improve supply,” Infosys’ Tucker said. “Investments can also be directed towards cleaning up bad industry practices like flaring and oil spilling, which will open up significant waste reduction potential.”

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