Russia’s invasion of Ukraine last year caused oil and gas prices to surge, triggering a cost of living crisis in many countries, including the UK.

To pay for support for households and businesses experiencing this energy price crisis, the government introduced an additional 25% levy on oil and gas extraction from 26 May 2022. This was increased again in the 2022 Autumn Statement to 35% from January 1 2023. Proposals were also put forward for a separate 45% electricity generator levy.

But recent bumper earnings announcements from large oil and gas companies have called into question how effective these taxes really are.

In 2022, Shell’s annual income to shareholders increased by 211% from US$20 billion (£16.5 billion) to US$42 billion. Similarly, BP reported a 215% rise in profits to US$28 billion, from US$13 billion in 2021. But the UK taxes these companies pay are extremely small compared to the overall amount they pay globally.

Over the winter months, ongoing media reports have detailed how many people are being forced to choose between heating and eating. This raises questions of fairness and has led to calls for further increases in windfall taxes for these companies.

But my research into the UK taxes these companies pay versus the profits they are making right now shows that even larger windfall taxes for energy companies may not make a massive difference to the amounts generated from recent record profits.

It’s possible to get some idea of this by broadly comparing Shell and BP’s reported profits with their tax contributions. The chart below shows the ratio of taxation to revenue paid by these companies between 2019 and 2022. There have been substantial fluctuations across the years, including a significant jump between 2021 and 2022, suggesting these companies did pay more tax in 2022 – after the 25% windfall tax was introduced.

Revenues made versus taxes paid globally