High billion-dollar revenue: Shell and TotalEnergies double their profits thanks to the high oil price

Since the Iran War, oil companies around the world have been making huge profits. European companies also benefit. This is likely to further fuel debates about an excess profits tax.

European oil companies are benefiting from the high prices for crude oil due to the Iran war. The companies Shell in Great Britain, TotalEnergies in France and Repsol in Spain reported billions in profits in the third quarter. Shell made a profit of $12.1 billion (10.9 billion euros) from July to September, more than double the previous quarter.

TotalEnergies increased its profit in the third quarter to a record $8.3 billion, again more than twice as high as in the previous quarter. The group benefits “fully from its integrated business model and its geographical diversification,” explained company boss Patrick Pouyanné. Repsol increased its profit in the three-month period from 574 million euros to 2.8 billion euros.

Several EU finance ministers, including Federal Finance Minister Lars Klingbeil, have been calling for an excess profits tax for oil companies at EU level for months. The EU Commission is keeping a low profile; EU Economy Commissioner Valdis Dombrovskis said just in September that member states "can already introduce a tax on extraordinary profits if they wish" at national level. A tax on excess profits at national level would disadvantage companies there.

Excess profits tax already existed

In 2022 and 2023, the EU imposed an excess profits tax when energy prices rose sharply after the start of the Ukraine war in 2022. A regulation was introduced to introduce a temporary solidarity contribution. Oil, gas, coal and refinery companies had to pay a “temporary solidarity levy” for extraordinary profits.

Profits that were more than 20 percent above the average for the years 2019 to 2021 were subject to 33 percent taxes. The member states implemented this into national law. Through the EU energy crisis contribution, Germany received almost two billion euros in 2022 and around 465 million euros in 2023.

In Belgium, Ireland and Italy, companies sued against the respective national measures. Courts from these countries asked the European Court of Justice whether the EU regulation and the respective national regulations are compatible with European law. According to the Advocate General at the ECJ, they are - but the European judges have to make the final decision on this.