Windfall tax oil /gas companies

Evan3020

China now kicking off too.

wittynamegoeshere

It's very easy for internet debates to get artificially polarised.  It would be easy to caricature everyone arguing against as being rich capitalists probably wearing a top hat and sipping champagne, while those in favour must be communists.

Personally, I'm one of Thatcher's children - free markets etc.  I run a business.  But I can appreciate that things are definitely different for the energy companies at the moment.

I didn't hear many objections about free market fundamentals from business when the government was depositing massive amounts into their bank accounts every month in the form of furlough pay and other benefits and loans.

Covid was definitely not a normal period of time, and it is definitely not normal now either.  We're pretty much at war, against a superpower (or two).  The world and its markets are just not functioning at the moment.  A side effect is that some companies are making huge profits from the situation, but this money isn't appearing from thin air, it's being taken from the entire population for a vital public service.  This also disproportionally effects the poor, many of whom are being pushed into poverty as they spend the greatest part of their income on fuel.

MattMattMattUK

wittynamegoeshere said:

It's very easy for internet debates to get artificially polarised.  It would be easy to caricature everyone arguing against as being rich capitalists probably wearing a top hat and sipping champagne, while those in favour must be communists.

I do not see anyone on here arguing that, I do see someone creating and knocking down straw men. Personally I believe capitalism generates the wealth and funding necessary to provide the social system necessary to look after the population as a whole.

wittynamegoeshere said:

Personally, I'm one of Thatcher's children - free markets etc.  I run a business.  But I can appreciate that things are definitely different for the energy companies at the moment.

In many ways I am in favour of free markets, but I accept that they also have their limitations. I also run a business, I accept I sink or swim on my own efforts, that is the path I have chosen. I do not think things are different for energy companies at the moment, no one wanted to help them out when they were losing billions when Covid.

wittynamegoeshere said:

I didn't hear many objections about free market fundamentals from business when the government was depositing massive amounts into their bank accounts every month in the form of furlough pay and other benefits and loans.

From what I remember neither Shell or BP claimed CJRS funds, nor took government backed loans, despite losing billions because of Covid. As a Limited company director I also got no help from the government during Covid and the BBL was no use to me as there is no point in borrowing for the sake of borrowing. I accept that, running one's own business means that I have learned to take the rough with the smooth, even if this rough was caused by the government crashing the economy.

wittynamegoeshere said:

Covid was definitely not a normal period of time, and it is definitely not normal now either.  We're pretty much at war, against a superpower (or two).  The world and its markets are just not functioning at the moment. 

The one thing we should have learned is that there is no normal any more, from the boom of the early 2000s, the sub prime crash that caused a recession that was not like previous recessions, to the slow growth after, Covid, Russia invading Ukraine, the only certainty is change. The markets are absolutely functioning at the moment, demand is exceeding demand so prices are rising, that is the market in action, just because some people do not like that outcome does not mean it is not working.

wittynamegoeshere said:

A side effect is that some companies are making huge profits from the situation, but this money isn't appearing from thin air, it's being taken from the entire population for a vital public service. 

Some companies are making higher than usual profits, after 12 months of making lower than usual profits. They are making this money on their global operations and most is not even from UK sources, let alone from the UK public.

wittynamegoeshere said:

This also disproportionally effects the poor, many of whom are being pushed into poverty as they spend the greatest part of their income on fuel.

The "poor" are almost always disproportionately impacted by rising prices, however punitive taxes on multi-nationals will not resolve that. There is a system that works for that, the Scandinavian model, but the UK public do not want that model as many are of the opinion that "someone else" should pay for everything, rather than them making a contribution themselves. That is why we have a tax system where the bottom two thirds of earners in the UK have the lowest effective rate of income taxation in the EU (I know we unfortunately left), whilst the top third have the fifth highest. If we had the fifth highest across all income distributions we would have tax revenues similar to Norway, we could have the high quality of public services similar to Norway, with much less poverty and better social cohesion, however the UK public do not vote for that and no UK party is offering anything close to it.

wittynamegoeshere

Energy companies' record profits during global crisis 'immoral', says UN secretary general

https://www.youtube.com/watch?v=n3YNv6z3wVI

Couldn't have put it better myself.

Astria

Evan3020 said:

Shareholders are members of the public.
I am sorry the world does not work the way you want it to.

Surely if we are shareholders, we own a part of the company, so we should be getting paid a part of the profits?

brewerdave

Astria said:

Evan3020 said:

Shareholders are members of the public.
I am sorry the world does not work the way you want it to.

Surely if we are shareholders, we own a part of the company, so we should be getting paid a part of the profits?

We do - its called dividends !!! They get paid into pension funds which most are members of.

Evan3020

Do you own shares in these companies?
If so then you are getting dividends.

wittynamegoeshere

It's over-simplistic to think that companies always keep their profits, like it's some kind of law or fact.  Governments have subsidised and taxed various industries since time began.  Capitalism is not a fundamentalist religion - it serves the people, not the other way around.

They are making excessive profits because there's a war going on - both military and economic.  It's not normal for one of the major competitors to just vanish overnight, that just does not normally happen.  Obviously as a result of this lack of competition, the remaining companies get to fill that demand and the price rises.

I don't think anyone has a fundamental issue with say Apple making absurd profits.  They make these profits from selling a very high margin product to people who don't actually need one and could buy an alternative for less from elsewhere.  For whatever weird reason, some people decide to pay Apple's daft prices so they end up making stupid amounts of money.  Fine, not a problem, this is a free market choice.

But, when an entire industry raises its prices as one for an essential then you have to start having fundamental concerns about whether we think this is good for the world as a whole.

The price rise and excessive profits resulted from the actions of governments, this was not the result of free and fair competition.  It therefore seems reasonable that the government seeks to control the outcomes.

spot1034

A look at the share performances of big energy companies over the longer term might be enlightening to those who use words like 'immoral' to describe them. An investment in Shell over ten years would be broadly flat, and if you'd bought shares in BP at the same time you'd still be sitting on a loss, despite both having done well in the past year. You could have done much better by avoiding them.

Mstty

I get Shell dividends from the way a company I used to work for had share save schemes and free shares etc.

I also have 3 pension pots that no doubt have shares in all these energy companies making profit and in return boosting my pension pots.

Rainy day shares and the dividends buy more shares.

However, if there is a way they can help they should in this energy crisis.

Media pressure is building globally so they might.