Global Witness: Oil companies make record profits

According to the NGO Global Witness, European and American oil companies have made record profits since the start of Russia’s invasion of Ukraine in February 2022. The organisation says the total amounts to more than 260 billion euros.

After falling during the COVID-19 pandemic, wholesale energy prices rose sharply following the conflict in Ukraine. Economic sanctions imposed on Russia over its invasion of Ukraine and Moscow’s decision to retaliate by halting gas supplies to some countries pushed up gas prices in Europe and triggered a global energy crisis. The oil market also reacted to the situation, while developments in the Middle East are also causing concern. As a result, profits at American and European oil companies have soared, Euractiv reports.

The five largest Western oil and gas companies—Shell, BP, Chevron, ExxonMobil and TotalEnergies—have amassed profits of more than 281 billion dollars since Russia’s invasion of Ukraine, according to a report published by Global Witness.

A change of approach

Shell also announced in mid-2023 that it had reconsidered its plans to cut oil production every year for the rest of the decade.

Between 2023 and 2035, Shell will invest 40 billion dollars in oil and gas production, compared with 10 to 15 billion dollars in “low-carbon” products. In addition, it decided to lay off 200 people from its green jobs division, The Guardian reported.

Together, all the companies mentioned emit more carbon each year than Brazil, Australia and Spain combined, Global Witness pointed out.

The five fossil fuel giants paid their shareholders an unprecedented 111 billion dollars in 2023. That amount is around 158 times the sum pledged at the COP28 conference to countries threatened by climate change.

Shareholder payouts

According to Global Witness, Shell and BP made 75 billion pounds, enough to cover all UK household electricity bills for 17 months.

Under its new chief executive, Shell has not only changed its approach to fossil fuels, but has also focused on increasing shareholder payouts, The Guardian reported.

French oil giant TotalEnergies, meanwhile, paid 15 billion euros to its shareholders, more than enough to cover the 10 billion euros paid by the French government to cover damage caused by storms and drought in 2022.

Patrick Galey, lead fossil fuel investigator at Global Witness, said that “regardless of what is happening on the front line, the big fossil fuel companies are the main winners of the war in Ukraine”.

“Oil companies are now spending their profits on investor handouts and ever-increasing oil and gas production that Europe does not need and the climate cannot withstand,” Galey said.

Taxing fossil fuels

Sebastian Mang of the London-based New Economics Foundation said the staggering profits being accumulated by major oil companies were a striking example of a flawed economic system.

“It is high time to significantly raise taxes on the profits of companies such as Shell, Total and BP, ban new oil and gas projects around the world, and accelerate public green investment,” Mang told Euractiv.

The European Commission proposed revising the 2003 Energy Taxation Directive to ensure that low-carbon energy is taxed at a lower rate than fossil fuels. However, because taxation falls under the exclusive competence of EU member states, each has the right to veto the proposal, which has therefore been left on ice.

Carbon pricing

Thierry Bros, a professor at Sciences Po in Paris, told Euractiv that the additional profits made by energy companies mostly go back to shareholders, who can choose to invest them in greener companies if they wish.

According to Bros, a more effective way to change the behaviour of oil companies is to enforce carbon pricing policies more strictly.

“All these companies that have made huge profits should pay for all their Scope 1 emissions—that is, direct emissions from sources owned or controlled by a company—in the EU and the UK,” Bros said, adding that oil refineries should not be allocated any CO2 emission allowances.