In 2022, the profits of oil giants in Europe and the USA doubled.
Exxon, Chevron Shell, BP, Total Energies and Shell had a combined net income in excess of $200 billion. Their best year in history was the year of war in Ukraine
The global turmoil is a boon for the fossil giants. In 2022, five of the largest Western oil companies – ExxonMobil, Chevron, Chevron and Anglo-Dutch Shell as well as the British BP, Total Energies, and BP – logged a combined net profit exceeding $196 billion (EUR 183 billion).
This is double the amount they made in 2021 when oil prices were already rising and 50% more than the record earnings from the last stretch of the raw material supercycle, which was a period of sustained expansion driven by strong growth. The best year in oil majors history was the year of the Ukraine war, and the energy crisis.
These companies have enjoyed many tailwinds. The most profitable parts of the business were oil exploration and production. This was a result of a rise in crude oil prices, which reached $130. It is a new record. Refining, which is traditionally less profitable, performed well in an environment of rising demand and a restricted supply due to sanctions against Russia.
Oil prices steady after US stockpile swell
This money avalanche is affecting all fronts. Last year, the debt of five of the major Western oil companies was less than half of what it was in 2020 (the year of the Covid-19 pandemic). Two things drove shareholder remuneration to record heights: record dividends, where half the profits were distributed; and record share repurchases which raised the stock’s value.
Fossil giants are cashing in on the global turbulence. The West's largest oil companies – Shell, Total, BP, Chevron and Exxon – logged a joint net profit of over $196 billion in 2022 in the midst of the Ukraine war, and the near future is also looking good https://t.co/m2rT8M1pjd
— El País English Edition (@elpaisinenglish) February 9, 2023
Additionally, during the transition from fossil fuels to renewable energy, for the first-time, the world is spending as much money to produce new oil, gas and coal as to replace them. According to a Bloomberg NEF analysis, oil companies, particularly European ones, are increasing their investments in green hydrogen, solar photovoltaic, wind and other forms of renewable energy.
Shares are rising
Since the start of World War II, energy companies have provided a counterpoint to the difficulties of the stock market. This sector is home to 10 US-listed companies that have performed the best in 2022. According to Bloomberg data, oil and gas companies account for 10% of the S&P500’s total profits. This despite them only accounting for 5% of total market value.
Public calls for higher taxes on windfall profits are gaining momentum in this situation. This formula has been supported by the European Commission in recent months. Several countries, including Spain, Italy, and the United Kingdom, have taken unilateral steps to implement it.
The US President Joe Biden, on the other side of the Atlantic dedicated a section of the State of the Union to attacking the oil giants. He said that “they invested too little of this profit to increase domestic production” and to keep gas prices down. This attitude was called “outrageous” by the president.
