Big Oil Hits Cash Gusher While Consumers Take Hit

Six of the biggest oil companies with operations in the U.S. raked in nearly $50 billion dollars in just three months, according to a new set of earnings reports. As the price for nearly every consumer product we rely on in our daily lives continues to rise due to high oil and gas prices, Big Oil is earning record-breaking second quarter profits that exceed analysts’ already high expectations. This corporate profiteering that takes advantage of a wartime energy shock and the ongoing global pandemic, is thrashing the global economy while lining the pockets of fossil fuel billionaires. 

NRDC is tracking the profits of the 15 largest oil and gas companies with substantial production and operation footprints in the United States. As these preliminary numbers show, while people paid the price at the pump, Big Oil’s record profits last quarter marked a staggering 242 percent jump above last year’s second quarter profits. 

Meanwhile, these companies are not making the sorts of investments in near-term production that could bring energy prices down, cool inflation, and help consumers everywhere from the gas pump to the grocery store. Instead, they’ve rushed to reward shareholders with record stock buybacks and enormous dividends that together topped $18 billion. 

And to be clear, we’re talking about just the second quarter—and just the first six companies.  

Over the next two weeks, we’ll look at earnings from nine more companies, including BP and ConocoPhillips, whose combined income in the second quarter will likely drive the profits of these companies close to $100 billion in just three months. 

Here are the reports we have so far: 

Industry Investing Its Cash in the Past, Not the Future 

After the first week of earnings reports, we’ve seen six of the world’s largest oil and gas companies report not only unprecedented profits, but profits that almost universally exceed Wall Street expectations and further illuminate how corporate greed is driving rising prices around the globe in an era of war and global climate crisis. And despite being flush with cash that they could, in theory, be using to honor their “net zero” climate commitments, these global polluters are showing no indication of making investments that would spur any sort of fundamental energy transition. 

So, when industry goes through the laundry list of demands it says will bring prices down in the short term, the reality is clear: it is working overtime to lock us into continued dependence on the broken, fossil-dependent energy system for the long term. And even as the energy transition away from fossil fuels is accelerating globally, oil and gas companies are still avoiding investment in the renewable energy transition that these abundant cash flows could accelerate. Indeed, of the six companies tracked above, only Shell deems it noteworthy to report income from renewable energy holdings, with that income representing a paltry six percent share of its quarterly profits. 

How Are We Still Subsidizing This? 

What’s even more galling is the fact that as these earnings reports roll in, the fossil fuel industry enjoys billions in taxpayer giveaways at the federal, state, and local levels. These special tax gifts help oil and gas companies further increase their profits at every stage of the oil and gas pipeline – from exploration to refinement. Research by the Stockholm Environment Institute found that when oil prices are high – as they are now – 96 percent of these profits go to raise corporate profit, not expand the amount of oil and gas available to consumers.

Oil and gas profits, industry’s defense of subsidies, and its calls for deregulation or special treatment is especially appalling given that the U.S. is also experiencing a wide range of extreme weather events tied to climate change that is caused by the burning of fossil fuels. From extreme heat in the West to devastating floods in Yellowstone National Park and Kentucky, people across this country are paying with their lives and property for the greed of oil companies that continue to hold back meaningful action on climate change.

So, to recap: the public is paying these polluters thrice: first, we’re paying dearly as consumers at the gas pump facing unprecedented price spikes, second through massive tax giveaways, and third through the costs we all bear due to climate catastrophes—all while fossil fuel companies report that they are rolling in gob-smacking amounts of cash.

Things clearly need to change. We need an energy system powered predominantly by wind and solar energy. We need to electrify our transportation systems as soon as possible. This transition will not only lower prices for consumers, it will also free us from the boom-and-bust times of the fossil energy system that have rocked the global economy in both directions over the past two years. A rapid, just, and equitable energy transition will not only be good for the climate, but it will also be good for every single one of us as well.