Oil industry pockets €3bn in EU profits at the pump since invasion of Ukraine, research suggests

Oil companies have raked in a “record” €3bn in extra revenue through the sale of diesel and petrol in the European Union since Russia invaded Ukraine, new research suggests.

As consumers struggle to bear the cost of unprecedented fuel price hikes, research commissioned by Greenpeace suggests that the oil sector saw revenues increase by an average of €107m each day in March.

The campaign group is urging EU governments to bring in windfall taxes on oil sector profits in order to “stop this shameless profiteering from Ukraine’s suffering”, and to investigate potential price-fixing – with probes already underway in Germany and Austria.

“While millions of Europeans struggle with sky-high fuel and energy costs, the oil industry is driving up prices to reel in record profits on the back of the war and the ongoing energy crisis,” said Klara Maria Schenk, climate and transport campaigner for Greenpeace Central Eastern Europe.

“The increase of crude oil prices doesn’t justify price hikes along the supply chain and at the pump.”

Comparing the change in profit margins between January and March in the downstream sector – from crude oil tankers to forecourts – the analysis suggested that average daily extra revenues from the sales of diesel and petrol in March amount to €94m and €13m respectively.

While crude oil prices between January and March rose by about 19 cents per litre, the research found that prices increased more significantly for diesel refinery products (by 30-31 cents per litre) and for diesel at the pump (by 36 cents per litre).

According to the research, which was carried out by Dr Steffen Bukold of Hamburg-based consultancy EnergyComment, consumers in Germany shouldered a third of the total cost of the fuel price hikes witnessed at forecourts across the EU in March.

Behind Germany, where extra revenues in March were estimated to total €1.18bn, were France (€412.3m), Italy (€387.5m) and Spain (€235.6m). However the trend is the same across the bloc, with diesel margins in particular increasing sharply.

Greenpeace alleged that “these substantial revenue margins clearly show how the oil industry has exploited the crisis by driving up prices along the supply chain, while their average cost base has not changed significantly”.

While Dr Bukold emphasised that extra revenues should not be confused with extra operational profits, he said there was a “strong correlation” between the two as long as refinery costs remain stable, adding that his calculations of extra revenues “err on the cautious side”.

Ms Schenk urged EU governments to impose windfall taxes “on these immoral profits”, calling for the revenues to be used instead to help struggling households and “accelerate the transition of our oil-addicted transportation sector into a mobility system that serves the planet and people”.

While the European Commission has allowed governments to tax windfall profits in the energy sector in the wake of Vladimir Putin’s war, it has “largely turned a blind eye to the oil sector”, with only a few countries imposing taxes and focusing mostly on the gas and electricity market, Greenpeace said.

And although the Commission is expected to release a plan to reduce Europe’s dependence on Russian fossil fuels in May, Greenpeace warned that an early draft of the REPowerEU plan “completely ignores the transport sector” – despite it being responsible for two thirds of the EU's oil consumption.

Russia is the world’s second-largest oil producer, behind the United States, and at the end of 2021 produced the equivalent of nearly 12 per cent of global oil consumption.

Of the 7.8 million barrels per day exported by Russia in December, some 4.5 million barrels per day flowed to OECD countries in Europe prior to the Ukraine war, according to the International Energy Agency.

With EU sanctions failing to include an embargo on Russian oil, as a result of the high reliance of many member states, the current volume is likely to be pre-similar, as pre-war contracts will be worked off only by April, with the trend less clear in the months to come, Greenpeace said.

The Independent has approached the Commission for comment.

In the UK, where Russian imports account for 8 per cent of total oil demand, ministers have confirmed an intention to phase out these imports by the end of the year.

But while the Labour Party is calling for windfall tax on North Sea oil and gas profits to ease the mounting cost-of-living crisis, with Sir Keir Starmer calling it “a very straightforward solution to a very real problem”, Boris Johnson and his ministers have repeatedly rejected such a move.

Meanwhile, an annual report released by Shell on Tuesday showed that – rather than paying tax on its profits in the UK – the oil giant received $121m from HM Treasury in 2021, as a result of tax refunds, reported by the Financial Times to be related to the decommissioning of old oil platforms.

This marked the fourth consecutive year that the firm – which has its headquarters in the UK – paid no tax on its North Sea oil and gas production.

Out of the 25 firms mentioned in Shell’s report, the UK was one of only three nations to actually pay more money to Shell than they received – with India and Germany’s respective payouts of $18.6m and $3.9m paling in comparison to the UK’s.

On Thursday, the government released its new energy security strategy in full, which included pledges to invest in hydrogen and nuclear power, and to pursue new fossil fuel projects in the North Sea.