The latest quarterly figures from oil companies are likely to give a boost to the debate about an excess profits tax. The interim financial statements show how much European oil companies benefit from the high prices for crude oil. The companies Shell, TotalEnergies and Repsol reported billions in profits in the third quarter.
The British oil and gas company Shell made a profit of 12.1 billion dollars (10.9 billion euros) from July to September, more than twice as much as in the previous quarter. It is the highest profit since 2022. In the same period last year, the profit was $5.43 billion. "Shell's relentless focus on operational performance led to very strong results in a quarter of ongoing severe disruption to the global energy system," said CEO Wael Sawan.
The Austrian energy group OMV also benefited from high oil and gas prices in the third quarter. Operating profit rose by 68 percent to 2.12 billion euros compared to the same period last year. Special effects as well as profits and losses that arise from price changes in inventories are excluded.
Share buybacks announced
The background to the good figures is the conflicts in the Near and Middle East. They helped oil companies achieve record margins when converting crude oil into fuels such as diesel.
TotalEnergies said profits from the refining business had increased fivefold to $3.6 billion. The liquefied natural gas (LNG) business was also running smoothly and contributed $1.9 billion to the result.
Shell and TotalEnergies each announced share buybacks. In this way, corporations give more money back to their shareholders and want to make their shares more attractive. With the buybacks, they meet their distribution targets and reduce the number of shares outstanding. This means that the dividend sum will be spread over fewer shares in the future.
Debate about excess profits tax
Several EU finance ministers, including Federal Finance Minister Lars Klingbeil (SPD), have been calling for an excess profits tax for mineral oil companies at EU level for months.
In view of the high profits of the oil companies, the Greens reiterate the call for taxation of excess profits. "While we are all groaning under high fuel prices and the consequences of the climate crisis, Shell, Total and the other oil companies are once again making record profits this quarter," said the Green Party's climate policy spokeswoman, Lisa Badum. She accused Finance Minister Klingbeil of "feeding additional tax money down the throats of the oil bosses with his ineffective fuel rebate."
According to Badum, the Greens are therefore calling for the introduction of an EU-wide tax on fossil profits, as proposed by Spain. The revenue should be used to finance the costs of climate change and adaptation to its consequences. Specifically, the Greens are demanding, among other things, that the approval of new fossil fuel infrastructure be stopped with immediate effect.
The EU Commission is holding back
The EU Commission is keeping a low profile on this. EU Economy Commissioner Valdis Dombrovskis said that member states "can already introduce a tax on extraordinary profits at national level if they wish."
In 2022 and 2023, the EU imposed an excess profits tax when energy prices rose sharply after the start of the Ukraine war. A regulation was introduced to introduce a temporary solidarity contribution. Oil, gas, coal and refinery companies had to pay a “temporary solidarity tax” 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.
