As parts of the world reel under unprecedented heat, oil companies are raking in unprecedented profits. In the first three months of 2022, the 28 largest fossil fuel companies made close to US$100 billion.
In the second quarter, Exxon made US$18 billion, Shell and Chevron close to $12 billion each, and BP $8.5 billion—much higher than their record first-quarter profits.
A recent study shows the oil industry has raked in profits of $3 billion a day, or $1 trillion a year, for the past 50 years. As the Guardian notes, “These profits are driven not by some fantasy of free enterprise and perfect competition but by the exact opposite: cartels, megacorporations, and the regulatory capture of governments, conspiring to create a market free of both competition and of a price that reflects the actual cost to the world of the product that is being sold.”
Using those companies’ products as intended—that is, burning oil, gas, and coal—contributed to heating never before experienced in some countries. In the U.K., temperatures climbed past 40° C in July for the first time—10 to 15 degrees warmer than normal. In the U.S., 92 all-time highs were recorded up to July 16. Globally, 188 heat records were broken. In Verkhoyansk, Russia, the temperature hit 38° C on June 20, the highest ever documented in the Arctic. Canada has also experienced record high temperatures.
This has brought increasing wildfires, severe health problems and death, warming, and increasingly acidic oceans, melting ice sheets, rising sea levels, more intense and frequent tropical storms, mass evacuations, flooding, and more.
Russia’s invasion of Ukraine has driven oil prices and profits higher, again demonstrating that our fossil fuel habit destabilizes social order and economies as well as the climate.
“It is immoral for oil and gas companies to be making record profits from this energy crisis on the backs of the poorest people and communities, at a massive cost to the climate,” UN secretary general António Guterres said, urging governments to “tax these excessive profits, and use the funds to support the most vulnerable people through these difficult times”.
Noting that “Household budgets everywhere are feeling the pinch from high food, transport, and energy prices, fuelled by climate breakdown and war”, Guterres also called on governments to manage fossil fuel demand and to offer “social, technical, or financial support” to help developing nations shift to renewable energy.
Oil companies say they’re investing in the transition: “Today’s results show that BP continues to perform while transforming,” CEO Bernard Looney said. “We do this by providing the oil and gas the world needs today—while at the same time, investing to accelerate the energy transition.”
Are they? The world’s biggest oil and gas companies spend less than one percent of their budgets on green energy. Most of the money is going to share buybacks and shareholders. Executives, meanwhile, say the way to address rising prices is to pump more oil. “I assure you that Chevron is doing its part to help address these challenges by increasing capital expenditures to $18 billion in 2022, more than 50% higher than last year,” Chevron chief executive Mike Wirth wrote to U.S. President Joe Biden.
Industry executives have successfully lobbied for ever-increasing subsidies and tax breaks, including $151 billion from G20 governments for COVID-19 recovery, and they’ve been spending hundreds of millions a year on efforts to block and delay climate policies.
That has more people calling not just for windfall-profits taxes but also measures such as a “Fossil Fuel Non-Proliferation Treaty”. Tzeporah Berman, international program director at Stand.earth and treaty initiative chair, argues this would “end the expansion of oil, gas, and coal, phase out existing production to limit warming to manageable levels, and accelerate a fair energy transition where wealthy, fossil fuel-producing nations lead and support other countries so there is affordable, clean energy from sun, wind, and water for everyone”.
Those who profit from coal, oil, and gas can’t be trusted to address the climate crisis and ensure a livable planet for our children, grandchildren, and generations to come. Governments must take their global commitments seriously and stop supporting the fossil fuel industry while doing everything to facilitate a rapid transition to cleaner energy.