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Energy Summary for May 26, 2022

2022-05-26 20:13 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for July delivery added $3.76 to $114.09 on the New York Merc, while Brent for July added $3.37 to $117.40 (all figures in this para U.S.). Western Canadian Select traded at a discount of $18.00 to WTI, unchanged. Natural gas for June lost 16 cents to $8.91. The TSX energy index added 1.09 points to close at 266.10.

The big news in energy circles came from across the ocean. The U.K. government has announced a 25-per-cent windfall tax on the profits of energy companies, bowing to political pressure to support Britons grappling with higher costs of living. "We will introduce a temporary and targeted energy profits levy," U.K. Chancellor Rishi Sunak told Parliament. The tax (which is in addition to the 40-per-cent headline tax rate already paid by the oil and gas sector) is expected to raise five billion pounds over the next year and help pay for a new package of benefits worth 15 billion pounds.

Mr. Sunak said the oil and gas sector is enjoying bumper profits not because of greater risk-taking or efficiency, but because of higher commodity prices." He is aiming to "tax [these] extraordinary profits fairly." The timeline for the ostensibly temporary tax is somewhat murky, with Mr. Sunak claiming that it will be "phased out when oil and gas prices return to historically more normal levels." The legislation for the levy will also include a sunset clause in 2025, meaning it will expire in December of that year if not already revoked.

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