Record profits for the oil companies – at odds with climate agreements


The oil industry seems to care care little about the accelerating climate crisis that humanity is in. In recent days, several companies have presented record profits for 2022, a year when energy prices skyrocketed as a result of Russia’s war in Ukraine. According to Jens Pedersen, oil analyst at Danske Bank DANSKE +2.65% Dagens utveckling , last year was hectic for the oil market. “You could say it was the perfect storm. Both the US and Europe opened up after corona, people started working and traveling again. At the same time, we have Russia’s invasion of Ukraine, which created uncertainty around supply, leading to the highest prices we’ve seen in ten years,” he says. The result was a prize which was sometimes at 130 dollars a barrel. A level the world has not seen since the Arab Spring. For Shell, the world’s largest petroleum company, this led it to recently report a profit of $40 billion for 2022, which is more than the company has ever earned in its 115-year history. Exxon, America’s largest oil producer, could this week present a profit of $55 billion for 2022. Chevron, America’s second largest oil company, could in turn report a profit of $36.5 billion. And US Conoco Phillips doubled its profit for the same period to $18.7 billion, the highest figure in a decade. Together they had four companies last year total sales of one trillion dollars, notes CBS News. An amount that compares with economies such as Colombia, South Africa or Switzerland. When BP, the last of the companies, presented its results this week, it was able to report a record profit of 28 billion dollars for 2022 and a higher dividend. Perhaps even more startling, however, was that it announced at the same time that it is changing its previous plan for phasing out oil. Instead of, as promised, reducing the production of oil by 40 percent by 2030 (from 2019 levels), it is now only to be reduced by 25 percent. “If the majority of your investments remain tied to fossil fuels, and you even plan to increase those investments, then you cannot claim to be in line with the Paris Agreement,” said Mark van Baal, founder of the activist shareholder group Follow This to Reuters. Both Exxon and Chevron have previously announced that they will increase investments in their oil production in order to “take advantage of” the high energy prices. Jens Pedersen believes that this is a logical consequence of the increased profits. “One might think that the pandemic and the war in Russia provided perfect opportunities for the world to change and get away from oil. But it is not that simple. When Russia’s exports have decreased, other countries have taken market shares.” However, it is not, as the figures from the companies above might suggest, American and European companies that primarily squeezed the space that Russia left behind. According to Jens Pedersen, the fact that the country’s production has decreased by 15 percent has instead been exploited by Norway, Canada and countries in South America. “Brazil, Argentina and Guyana have greatly increased their production,” he says. The consumption of oil lies today at roughly the same level as before the pandemic broke out and the war in Ukraine began. Jens Pedersen believes that it will rise further. “You have to assume that. China is opening up after the pandemic, which could increase consumption. On the other hand, a recession in the US and Europe can reduce it. “As far as the US is concerned, the way forward is uncertain, says Jens Pedersen. Before the 2020 election, Joe Biden spoke often and a lot about the transition to renewable energy, a rhetoric that he has now toned down. “When prices rose last year, he changed his message and called on American companies to increase their production to moderate the price of gasoline. At the same time, I think that investments would have increased much, much more in the United States if these two crises – the pandemic and the war – had occurred ten, fifteen years ago.”

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