Profits of Oil Companies Soar Amidst Russia-Ukraine Conflict
The world’s five largest listed oil companies, known as the “super-majors,” have seen their profits skyrocket since the onset of the Russia-Ukraine conflict in February 2022. According to Global Witness, BP, Shell, Chevron, ExxonMobil, and TotalEnergies have collectively made a staggering $281 billion in profits during this period. These figures highlight the significant impact that rising energy prices and household bills have had on the bottom lines of these oil giants.
UK-Based Companies BP and Shell Lead Profit Surge
The UK-based companies, BP and Shell, have raked in a combined profit of $94.2 billion since the conflict began. Global Witness estimates that this amount is sufficient to cover all of Britain’s household electricity bills for 17 consecutive months. The scale of these earnings demonstrates the financial windfall that these oil companies have experienced amidst the ongoing crisis.
Shell, for example, has managed to accumulate $58.9 billion in profits since the second quarter of 2022. The company has recently announced plans to lay off up to 330 employees from its low-carbon solutions unit as it redirects its focus towards high-profit oil projects.
Similarly, BP, which had previously scaled back its climate goals, has recorded a profit of $35 billion since the conflict started. These numbers underscore the resilience of these oil giants in their pursuit of maximizing profits, regardless of the geopolitical situation.
Meanwhile, Chevron, ExxonMobil, and TotalEnergies have jointly made profits exceeding $187 billion during the same period. This further emphasizes the dominant role that these major European and US companies play in the global oil industry.
The staggering profits generated by the oil companies have drawn criticism from Global Witness’s senior fossil fuels investigator, Patrick Galey. He argues that while the War in Ukraine has devastated millions of people and caused energy struggles across Europe, it is the fossil fuel majors who are reaping the rewards.
In addition to the oil companies, shipping companies and foodstuff suppliers have also seen a significant surge in profits over the last two years. As a result, some economists are calling for targeted price controls during emergencies to prevent firms from exploiting crises for their own gain.
Record Payouts Loom for Oil Company Investors
Despite mounting public outrage and criticism, the five super-majors are projected to reward their investors with record payouts of over $100 billion in 2023, as revealed by the Institute for Energy Economics and Financial Analysis (IEEFA). These figures highlight the continuous growth of fossil fuel profits, even in the face of weaker commodity market prices.
The IEEFA reports that in 2022, these oil giants distributed dividend payments and engaged in share buy-backs worth $104 billion. Such lucrative investor rewards further fuel concerns about the fossil fuel industry’s prioritization of short-term returns over sustainable practices.
Patrick Galey of Global Witness argues that the fossil fuel industry’s commitment to continually expanding oil and gas production is exacerbating the climate crisis while ignoring the real needs of consumers and the planet.
The looming record payouts that investors are projected to receive in 2023 reveal the disconnect between the fossil fuel industry’s financial success and its impact on the environment. Despite the urgency to transition away from fossil fuels, these companies continue to prioritize financial gains at the expense of the planet.
Critics are questioning whether private corporations can be trusted to manage systemically significant sectors during times of crisis, especially when their pursuit of profit often clashes with public and corporate interests.
Calls for Targeted Price Controls to Protect Consumers
As the energy crisis unfolds, economists are advocating for targeted price controls to prevent companies from exploiting emergencies to drive up profit margins and shareholder dividends at the expense of consumers.
Isabella Weber, an economist at the University of Massachusetts, Amherst, recently addressed the European parliament, stating that a new approach to emergency economics is needed. She argues that the energy crisis has been catastrophic for most Europeans but highly lucrative for energy companies. This misalignment of public and corporate interests raises questions about the role of private corporations in systemically significant sectors during such crises.
Weber argues that the soaring profits of corporations in the food, shipping, oil, and gas sectors during emergencies necessitate the implementation of targeted price controls. By doing so, firms can be prevented from taking advantage of crises to maximize their profits at the expense of consumers.
The need for a regulatory framework that safeguards consumer interests while balancing the needs of corporations is crucial, especially as the world faces increasingly frequent and severe climate-related crises.
Analyst comment
Positive: The profits of oil companies have soared amidst the Russia-Ukraine conflict, with the world’s five largest listed oil companies collectively making $281 billion in profits. This demonstrates their financial windfall amidst the crisis.
Negative: Critics argue that the fossil fuel industry’s prioritization of short-term profits over sustainable practices exacerbates the climate crisis and ignores consumer and environmental needs. The projected record payouts of over $100 billion to investors in 2023 highlight this disconnect.
Neutral: Economists are calling for targeted price controls to prevent companies from exploiting emergencies for profit at the expense of consumers. A regulatory framework balancing consumer interests and corporate needs is crucial in the face of frequent climate-related crises.
