A Week Of Record Oil Profits — Here Comes The Greenwashing!
The oil and gas sector is counting its billions, and preaching renewables. The math doesn't compute.
PARIS — It’s been a gigantic week for the “Big Five.” Texas-based Exxon kicked things off, announcing a record $55.7 billion in annual profit. Fellow American oil giant Chevron followed, with $36.5 billion, UK multinational Shell was next with $39.9 billion, joined by London-based BP at $27.7 billion in gains, and to finish the week off in France with TotalEnergies posting its own all-time record net profits of $36.2 billion.
After the industry crisis during the early months of the COVID-19 pandemic, demand has returned to growth; and the war in Ukraine sparked an energy crisis that has pushed up prices leading to a staggering rise in earnings. The toasts in the corporate board rooms, however, come with the spotlight shining on the oil and gas sector like never before.
The Big Five today stand at the intersection of two of society’s deepest problems: wealth disparity and climate change.
In the short term, TotalEnergies announced that it will use some of the profits to lower the cost of gas and oil for its consumers as many families are currently struggling to pay increasingly expensive bills and gasoline.
All the energy giants also emphasized this week that the focus of their future investments is in renewable energies. It is by now a reflex response to criticism from environmental protection organizations and consumers. Whether the top company leaders would forego profits to fight climate change is another question.
Will they forego profits to fight climate change?
Energy companies want to "present themselves as being on the right side of history and part of the solution," economist Maxime Combes told French daily Le Monde. Others simply call it “greenwashing.”
A more long-term attempt to reposition its messaging comes from Italy, where the Eni Group (in the top 10 of Western oil & gas firms) founded a separate entity in 2021 called Plenitude, a renewable energy company with the goal of offering gas and electricity supplies derived from renewable sources to help reduce greenhouse gas emissions. In the past days, Plenitude has been the main sponsor of the Sanremo festival, the iconic Italian song contest that is watched annually by an average of more than ten million viewers per night.
Eni gas station in Italy
This year’s edition was often interrupted by the company's promotional spots reminding viewers how committed Eni is to the fight against climate change. However, as the Italian online daily newspaper Il Post explains, Plenitude produced operating profits of 497 million euros in 2022 — a relatively small figure when compared to that produced by all of Eni's other businesses and amounting to a net profit of 10.8 billion euros.
Such ratios can be found across the industry. According to an IEA study published in June 2022, the world's 20 leading oil and gas operators had spent only about $10 billion on clean energy technologies, particularly in the offshore wind and solar sectors. This is more than double the 2020 investment, but is still less than 4% of companies’ total investment in exploration and production activities. In other words, they're still busy drilling for good ol' fashioned oil and gas.
It may be upsetting to see these giant energy companies count their massive profits — but it's that last little number we all need to be watching.