Outrage as Shell announces ‘nauseating’ $5.5billion pay out to shareholders amid cost of living crisis
FUEL giant and energy firm Shell has come under fire from experts for announcing a $5.5billion pay out to shareholders amid a growing cost of living crisis.
It comes as record wholesale gas prices and supply chain issues have put household finances under pressure, pushing up energy bills and petrol costs.
It means households have been plunged into a cost of living crisis in recent months - but Shell's shareholders are set for a $5.5billion pay day.
The inflation rate has hit a decade-high of 5.1%, attributed to rising fuel and energy costs.
And some families have said they are choosing between heating and eating because of rising energy bills.
Record fuel prices have also been putting pressure on family finances.
The government is also being urged to step in to support the energy industry and households amid warnings that bills could rise further in the coming months due to higher wholesale market prices.
But rising gas prices appear to be boosting Shell's profits.
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The FTSE 100-listed energy giant said in a fourth quarter update today that profits in its “integrated gas” division were expected to be “significantly higher" compared with a year before.
It announced it would return $5.5billion to shareholders from the sale of its Permian US shale business through share buybacks, a strategy agreed last year and unrelated to gas prices.
Shell's profits are from its global operations rather than just in the UK.
But critics have questioned why companies such as Shell can't do more to bring down energy supply and fuel costs if they are making so much profit from rising commodity prices.
Howard Cox, founder of the FairFuelUK, which campaigns for fairer petrol pump pricing, said: “It will nauseate millions of drivers, fleeced at the pumps by the current unscrupulous fuel supply chains, to see Shell rub even more fiscal salt into consumers’ skyrocketing cost of living wounds."
Cox added that there was little incentive for the government to step in as it benefits from VAT receipts from higher fuel prices.
He said "The foul stench of corporate greed hovers over hard-pressed motorists being treated relentlessly as easy cash cows from both political and profit-making concerns.”
Sarah Coles, personal finance analyst for Hargreaves Lansdown said rising oil and gas company profits and payouts may feel unfair to anyone whose budget is stretched by rising energy and petrol prices.
She added: "Eye-watering hikes in energy bills are on the horizon, and we need the government to step in or millions of people will be unable to heat their homes.
"This might come through additional support for the most vulnerable, which hasn’t reflected the rise in energy prices over the years.
"There’s also hope that the government and the energy industry can thrash out a solution to spreads the cost of price rises, before they kick in this April."
A spokesperson for Shell said: "We have stepped in to help customers of energy companies which have recently folded.
"We’re working with government and others on how to support customers facing rising energy bills and make the UK market sustainable in the long term for consumers and industry."
The company also owns supplier Shell Energy, which made losses of £84million in 2020 and £27million the year before, and has taken on customers from collapsed suppliers First Utility and Green.
There are also more than 1,000 Shell petrol stations across the UK but half are owned by independent dealers who can set their own pricing.
Gas prices are just one factor that goes into fuel costs.
Around two-thirds of the cost of a litre of fuel goes to the government in the form of fuel duty and VAT.
Ofgem's energy price cap is meant to limit bill increases for out-of-contract customers but not all households are benefiting.
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The cap also rose in October 2021 due to higher wholesale gas prices and families will find out in February how much the next cap will increase by from April.
Some in the industry have branded rising energy prices as a "national crisis."