Big Oil's big payday
The year-end profits for the West’s biggest privately held oil companies were released last week and the results were staggering: a record $200 plus billion. And when you add the companies controlled by governments – Aramco for example – the industry is getting richer on a scale never seen before.
Exxon Mobil made $56 billion in profit last year, its largest annual haul ever. Chevron earned $36 billion, also a company record. Shell, Europe’s biggest energy company, doubled its profits in 2022 to almost $40 billion — the highest in its 115-year history.
In fact, of the top six western, publicly-traded, not-government-run oil companies, every one with the exception of Marathon Petroleum more than doubled their earnings. And Marathon’s still rose by 67%. All told, the companies pulled in $228 billion last year, tens of billions of which they used to enrich their stockholders in the form of dividends and stock buybacks.
For example, Chevron announced a $75 billion buyback program. Exxon announced its own $50 billion repurchase plan in December. The record profits and share repurchases paid out to investors in 2022 by the western majors have provoked outrage. Most notably, last week President Biden commented in his State of the Union address that those actions “in the midst of a global energy crisis” were “outrageous.” He proposed quadrupling the federal tax on corporate stock buybacks.
The comments of the United Nations Secretary-General were even more pointed:
“It is immoral for oil and gas companies to be making record profits from the current energy crisis on the backs of the poorest, at a massive cost to the climate. This grotesque greed is punishing the poorest and most vulnerable people while destroying our only home.”
Those record profits are largely driven by the economic recovery following the COVID pandemic-related recession and the war in Ukraine. After years of pressuring Big Oil to curb production, political leaders from London to Berlin to Washington changed tack last year as prices surged, calling on companies to boost output or help them procure replacements for boycotted Russian fossil fuels following Moscow’s full-scale invasion of Ukraine.
As a result, Big Oil is raking it in.
Instead of allowing the companies to enrich their shareholders and fatten their bottom lines, why not divert some of those earnings to offset societal costs resulting from climate change related storms and rising sea levels?
New Yorkers will have to pay tens of billions of dollars to address the climate crisis. A 2022 federal report found New York State experienced 51 billion-dollar disaster events due to the climate crisis from 2000 to 2021 – costing the state between $50 to $100 billion, and up to $20 billion in 2021 alone. And more intense storms and rising sea levels pose threats to the state’s coast lines along the Great Lakes, the Hudson River and, of course, the Atlantic Ocean. Protecting those shores will be extremely expensive. For example, the U.S. Army Corps of Engineers estimates that it will cost $52 billion to protect New York Harbor alone.
Let’s not forget that the crisis we are now in is the result of the oil industry’s efforts. The industry knew for decades that the burning of fossil fuels will lead to the planet heating up. Instead of taking responsibility for their business practices, they engaged in a campaign of aggressive climate denial. Decades of opposition to environmental protection legislation and international treaties has resulted in a climate crisis that only dramatic action can help to mitigate.
They are now making money hand over fist. And they believe they will continue to do so for years to come. Chevron chief Mike Wirth recently stated that “The reality is, [fossil fuel] is what runs the world today. It’s going to run the world tomorrow and five years from now, 10 years from now, 20 years from now.”
Why not shift some of those profits to offset the financial, health, and environmental burdens we will all face as a result of climate change – changes that could have been avoided if not for the oil companies’ propaganda?
Legislation introduced in New York and under consideration in Maryland, Massachusetts, and Vermont would divert some of those profits – today and for years to come – to cover climate change induced costs. The New York bill requires companies most responsible for greenhouse gas emissions to pay a total of $75 billion over 25 years for the environmental damage they have done. The funds would allow New Yorkers to invest in massive infrastructure improvements, upgrade stormwater drainage and sewage treatment systems, prepare the power grid for severe weather, create systems to protect people from extreme heat, and respond to environmental and public health threats.
As Governor Hochul and state lawmakers work to hammer out a final budget agreement, they should protect New York taxpayers from the significant and growing costs of climate change. They should claw back some of the oil industry’s staggering profits to cover the costs of global warming. Make the climate polluters pay.
Blair Horner is executive director of the New York Public Interest Research Group.
The views expressed by commentators are solely those of the authors. They do not necessarily reflect the views of this station or its management.