This text is taken from Courrier de l’économie. Click here to subscribe.
Oil companies were already doing all they could to drag their feet on going green. But the past year has convinced them to slow the pace even further in order to squeeze the maximum profit from fossil fuels for as long as possible.
The year 2022 was the year of all records in the oil sector. The five largest Western companies—ExxonMobil ($56 billion), Shell ($40 billion), TotalEnergies ($36.2 billion), Chevron ($36.5 billion) and BP ($27.7 billion)—all posted the biggest profits of their history.
If we add the results of the Norwegian Equinor (75 billion), but subtract the write-offs linked to the withdrawals of certain activities in Russia, we arrive at a dizzying total of almost 220 billion, or double the previous year, noted the same day the Reuters agency.
This exceptional performance is the result of the increase in demand and the explosion in oil and gas prices due in particular to the acceleration of the global economy after the slump caused by the COVID-19 pandemic. , as well as the energy crisis caused by Russia’s invasion of Ukraine. It will particularly benefit investors, who will be entitled to juicy dividends and share buybacks.
This rain of profits should ease a little this year, with the decline in gas and oil prices, while remaining well above anything we had known for more than twenty years, estimated the last month experts quoted by the FinancialTimes. As households will continue, at the same time, to struggle with a soaring cost of living, this is bound to give ammunition to those in the United States and Europe who are calling for a special tax on the “superprofits,” observed another AFP dispatch last week.
Accelerate the transition
It would be better, however, that the oil companies use this providential windfall to accelerate their transition to a carbon neutral economy, argued Thursday the FinancialTimes on its editorial page. Wasn’t the shock of the pandemic and the war in Ukraine supposed to hasten the end of fossil fuels? Unfortunately, this does not look like it for the oil companies.
Indeed, in addition to the gifts to their shareholders, they seem rather to want to take advantage of the chance to garner a maximum of income while it passes, observed last week The Economist. That is, investing in oil and gas projects that are likely to generate returns in five years rather than ten or more.
This does not mean that we will no longer invest in renewable energies. On the contrary, defended TotalEnergies, which promises to devote more resources to it this year than last year, ie 5 billion instead of 4 billion, out of total investments of 16 to 18 billion.
Wanting to be a leader in the field, BP had already stated, at the turn of the millennium, that its acronym no longer corresponded to “British Petroleum” (British oil), but to “beyond petroleum” (beyond petroleum). But forced to admit that the yields are now twice as good in fossil fuels (15%) as in green energies (6% to 8%), and that its shareholders did not see why they would settle for less than those of the much less ambitious American competition in environmental matters, the multinational announced, last week, a downward revision of its targets, reported among others The Guardian. Rather than reducing its fossil fuel production by 40% by 2030, it will cut it by 25%, she promised.
As for its investments in low-carbon sectors, they will be aimed more at biofuels, the development of electric vehicle charging networks and their convenience store chains, where profit margins are better than in solar or wind energy. . Accounting for 30% of the total last year, its “green investments” must rise to 45% by 2025 and 50% by 2030. This is clearly better than American companies, such as ExxonMobil where this proportion was barely 8% last year, the analyst from the FinancialTimes Helen Thomas.
This slowness of the oil companies to prepare for a world that aspires to carbon neutrality by 2050 will not surprise the committee of the House of Representatives of the United States Congress which has investigated for more than a year their misinformation campaign in the matter. . There were reported, at the end of last year, strategies of camouflage and manipulation of facts, lobbying of elected officials, intimidation of critics, empty promises and delaying maneuvers very similar to those employed by the tobacco industry in another era.
“It is remarkable to see that the strategies of certain industries have changed little over the decades. How they don’t really need to change because of their effectiveness, “said the American investigative media at the end of last year. The Intercept.