Chancellor Rishi Sunak will put Britain's energy security at risk if he imposes a windfall tax on oil and gas producers, the head of energy giant BP has warned.
Bernard Looney said that a tax raid on his industry would make the UK a less-stable environment for investing and potentially hold back plans to wean the UK off foreign oil and gas.
It came as experts warned of a looming surge in the price of diesel because refineries are struggling to keep pace with demand after supplies from Russia were cut off.
The Telegraph reports that Mr Looney said that BP plans to reinvest all of its profits from the North Sea over the next decade, following months of high wholesale gas prices which have led to record profits for producers.
The chief executive added: "What's our view on windfall taxes? A stable and competitive fiscal environment is an important element in any investment decision. And that is what we have in Britain today.
"By definition, windfall taxes are unpredictable - and so would challenge investment in home-grown energy. We know that from past experience for the whole of the North Sea sector and supply chain."
The comments, at BP's annual general meeting in London yesterday, are a sign of the pressure felt by oil and gas companies over a potential windfall tax as the rising cost of living dominates the political agenda.
Mr Sunak is understood to be increasingly tempted to mount a raid on the industry after weeks of pressure from Labour and the Liberal Democrats.
The BBC reported yesterday that the Chancellor has threatened to hit energy companies with a windfall tax if they don't invest enough in new projects.
Mr Sunak said that he wanted to see investment "soon" to boost energy security, and "no options are off the table" if not.
His comments come despite industry body Offshore Energies UK revealing earlier this month that energy producers in British waters are expected to invest up to £250billion by 2030 to provide the nation with secure and increasingly low-carbon energy.
Meanwhile, Prime Minister Boris Johnson is urging Mr Sunak to go further and faster on relief to help with the cost-of-living crisis as political pressure mounts as the economy falters.
Energy prices are a key cause of the cost-of-living squeeze, with households stung by a 54% increase in the energy price cap in April following months of high wholesale gas prices owing to global gas shortages and disruption caused by Russia's war on Ukraine.
It pushed average household energy bills up to £1,971, with analysts warning they will climb by several hundreds of pounds more when the cap is reset in October.
Motorists have also faced rising prices at the pump as demand for crude oil leapt following the pandemic.
Simon Williams, fuel spokesman at the RAC, said a new record diesel price is "edging closer" after average UK prices hit 179.55p per litre on Thursday - nearing its record high of 179.90p per litre on March 23.
It comes despite a 5p per litre cut to fuel duty which has been in force since March 23, with Mr Sunak under growing pressure to do more with their household bills.