Big Oil rakes in record profit haul of nearly $200 billion, fueling calls for higher taxes
Deer graze inside the gates of the Exxon Mobil Joliet refinery on the Des Plaines River. Exxon Mobil’s 2022 haul of $56 billion marked a historic high for the Western oil industry.
Chicago Tribune | Tribune News Service | Getty Images
The West’s five largest oil companies raked in combined profits of nearly $200 billion in 2022, intensifying calls for governments to impose tougher windfall taxes.
French oil giant TotalEnergies on Wednesday reported full-year profit of $36.2 billion, doubling last year’s total, as fossil fuel prices soared following Russia’s full-scale invasion of Ukraine.
The results see TotalEnergies join supermajors Exxon Mobil, Chevron, BP and Shell in recording a massive upswing in annual profits, after Exxon’s 2022 haul of $56 billion marked a historic high for the Western oil industry.
Altogether, the five Big Oil companies reported combined profits of $196.3 billion last year, more than the economic output of most countries.
Flush with cash, the energy giants have used their bumper earnings to reward shareholders with higher dividends and share buybacks.
“You may have noticed that Big Oil just reported record profits,” U.S. President Joe Biden said in his State of the Union address on Tuesday. “Last year, they made $200 billion in the midst of a global energy crisis. It’s outrageous.”
Biden said U.S. oil majors invested “too little of that profit” to ramp up domestic production to help keep gas prices down. “Instead, they used those record profits to buy back their own stock, rewarding their CEOs and shareholders.”
Biden proposed quadrupling the tax on corporate stock buybacks to incentivize long-term investments, insisting the supermajors would still make a “considerable” profit.
Activists from Greenpeace set up a mock-petrol station price board displaying the Shell’s net profit for 2022 as they demonstrate outside the company’s headquarters in London on Feb. 2, 2023.
Daniel Leal | Afp | Getty Images
Agnès Callamard, secretary general of human rights group Amnesty International, described Big Oil’s vast profits as “patently unjustifiable” and “an unmitigated disaster.”
“The billions of dollars of profits being made by these oil corporations must be adequately taxed so that governments can address effectively the rising cost of living for most vulnerable populations and better protect human rights in the face of multiple global crises,” Callamard said in a statement.
Big Oil executives have sought to defend their rising profits amid a barrage of criticism from campaigners, typically highlighting the importance of energy security in the transition to renewables and suggesting higher taxes could deter investment.
“Ultimately, taxes are a matter for governments to decide on. We, of course, engage and provide perspectives and the key perspective that we try to provide is a context around the fact that companies like ourselves that need to invest multiple billion dollars to support the energy transition require a secure and stable investment climate,” Shell CEO Wael Sawan said Thursday.
His comments came shortly after Shell reported its highest-ever annual profit of nearly $40 billion, comfortably surpassing its previous record of $28.4 billion in 2008.
“For example, windfall taxes or price caps simply erode confidence in that investment stability and so I do worry about some of the moves being made,” Sawan said. “I think there is a different approach that needs to be had which is to really draw investment capital at a time when we need to be able to embed energy security into the broader energy system here in Europe.”
The CEO of Saudi Aramco, the world’s largest energy company, has previously warned about the dangers of pressuring oil companies through higher taxes.
Asked by CNBC’s Hadley Gamble last month if a windfall tax on oil profits was a bad idea, Saudi Aramco’s Amin Nasser replied, “I would say, it’s not helpful for them [in order] to have additional investment. They need to invest in the sector, they need to grow the business, in alternatives and in conventional energy, and they need to be helped.”
Nasser said the transition to renewable technologies required significant investment, and this is likely to take a hit if companies face increased taxation.
Nonetheless, the advocacy group Global Witness says people have every right to be outraged by the extraordinary profits of Big Oil and called for an increased windfall tax.
“Given that we’re entering a global recession and that most of us know people who are struggling, we must all call out profiteering like this,” Alice Harrison, fossil fuels campaign leader at Global Witness, told CNBC via email.
“An increased windfall tax to help those struggling to pay their bills, along with a significant boost in renewable energy and home insulation, would end the fossil fuel era that is harming both people and the planet so severely,” Harrison said.
‘People can see the injustice’
“People can see the injustice of paying eye-watering energy costs while big oil and gas firms rake in billions,” said Sana Yusuf, climate campaigner at Friends of the Earth.
“Fairly taxing their excess profits could help to fund a nationwide programme of insulation and a renewable energy drive, which would lower bills, keep homes warmer and reduce harmful carbon emissions,” Yusuf said.
BP CEO Bernard Looney on Tuesday sought to defend the company from criticism after reporting record 2022 profits of $27.7 billion, saying the British energy major was “leaning in” to its strategy to provide the world with the energy it needs.BP, which was one of the first energy giants to announce an ambition to cut emissions to net zero by 2050, had pledged emissions would be 35% to 40% lower by the end of the decade.
It said Tuesday, however, that it was now targeting a 20% to 30% cut, saying it needed to keep investing in oil and gas to meet demand.
“We’re leaning into our strategy today,” BP’s Looney said. “We’re announcing up to $8 billion more investment into the energy transition this decade and up to $8 billion more into oil and gas in support of energy security and energy affordability this decade.”
Activist investor group Follow This was sharply critical of the move.
“If the bulk of your investments remain tied to fossil fuels, and you even plan to increase those investments, you cannot maintain to be Paris-aligned, because you will not achieve large-scale emissions reductions by 2030,” said Mark van Baal, founder of Follow This.
— CNBC’s Natasha Turak contributed to this report.
Swift Current Energy’s 800-megawatt (MW) Double Black Diamond Solar is up and running about 30 miles west of Springfield. It’s now the largest operating solar farm east of the Mississippi, and it’s set to make a serious dent in emissions while delivering clean energy to major customers, including the City of Chicago.
Chicago is sourcing around 70% of the power for its municipal operations from Double Black Diamond. That includes big energy users like O’Hare and Midway airports. Other customers buying power from the solar farm include CVS Health, Loyola University Chicago, PPG, State Farm, TransUnion, and Cook County, all through the energy company Constellation NewEnergy.
This project has been a long time coming – Swift Current started development in 2018 and leaned into a growing US supply chain. The company sourced most of its 1.6 million solar panels from First Solar’s Ohio factories, and the racking came from Nextracker, which used US-made steel and did some of the manufacturing in Chicago. Construction created around 500 jobs.
Double Black Diamond also met Illinois’ Clean and Equitable Jobs Act (CEJA) standards for labor and hiring, creating job opportunities for a broader group of workers. Over its lifetime, the solar farm is expected to generate $100 million in local tax revenue for Sangamon and Morgan counties. About 60% of that will go toward public schools, with the rest helping fund public safety, infrastructure, and community programs. Swift Current is also putting $10 million into community benefit programs, including school districts and local governments.
Chicago Mayor Brandon Johnson called the project “a powerful example of why we believe in the green economy.” He said the solar farm helps Chicago cut emissions, supports good union jobs, and lowers energy costs for city operations.
Read more: Home solar prices just hit record lows – and storage is even cheaper
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Range Energy, a company which builds large-battery electric trailers to help fleets electrify at the drop of a hat, has announced partnerships with Thermo King and ESL Power Systems to bring its technology to refrigerated trailer units.
The idea behind Range’s product is that it adds a battery and an electric motor e-axle to a semi truck trailer, instead of to the tractor itself, which means that a fleet can add electric capabilities without having to buy new tractors. This means the fleet can effectively hybridize its operation without having to buy new tractors.
While this isn’t a fully electric solution, it can still reduce fuel usage by a large amount (independent tests say 36%), and adds new capabilities to a truck – like better control over the trailer and regenerative braking to avoid brake fade.
We met Range at ACT Expo in Anaheim two years ago, where they gave us one of the coolest demos we’ve seen. Just by attaching to a tractor’s kingpin, the system can decide how much power to apply and offers extremely natural feeling movement, making a heavy trailer feel light as a feather:
Range isn’t quite up to production yet, but they have done some trials. In addition to the independent testing above, Range trialed its technology with Petaluma Egg Farm, up in Northern California, where it says the company saw a 50-70% improvement in MPG for the trucks using Range’s electric trailer.
But the company is still working to find novel applications for its technology, and when we caught up with them at ACT Expo this week, they wanted to focus on how Range trailers could be used for refrigerated freight in order to cut emissions and reduce the need for a separate engine to run the reefer unit.
In service of this, it has partnered with two companies in the refrigeration space – Thermo King, the biggest name in electrified trucks, and ESL Power Systems, a company that manufactures shore power solutions for heavy industry.
Range said Thermo King came to them because they’re the only company with enough energy storage to be able to run a refrigerated unit for an extended period of time. While there are other companies doing electrified refrigerated trailers, Range’s trailer has a much larger 288kWh battery (since it also works as a traction battery for the trailer’s electric motor).
This means it has a lot more energy on board to run a refrigeration unit, which can draw ~5-20kW depending on several factors. Range told us that fleets have told them this would be enough energy to keep the trailer box cold for a full day while unplugged from shore power, even in hot temperatures.
And that’s a big deal, because heretofore, refrigerated units have mostly run with an additional small diesel engine. Removing that engine means less pollution, less diesel usage, more noise, less maintenance, and it also means the refrigerated unit could operate in more environments (for example, you don’t want a running engine indoors if you can avoid it – but an electric unit doesn’t have to deal with that).
Speaking of shore power, that’s what Range is working with ESL to implement. ESL creates small, modular shore power systems which are easier to install, helping fleets save on infrastructure upgrade costs. Their boxes can deliver high-powered 480V 3-phase AC charging.
Plugging into one of these would allow the Range Energy trailer to charge at up to 50kW or so, meaning a 5-6 hour charge time for the 288kWh battery.
Range has already trialed its partnership with Thermo King, in the Petaluma Egg Farm example given above. Although the ESL partnership is newer, and those will be trialed soon.
Range is targeting the end of this year, or possibly the start of next year, for its first customer deliveries.
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Environment
Podcast: Elon is still CEO of Tesla, BYD EV sales surges while Tesla’s collapse, and more
In the Electrek Podcast, we discuss the most popular news in the world of sustainable transport and energy. In this week’s episode, we discuss Elon being challenged in his role as CEO of Tesla, BYD EV sales surging while Tesla’s collapse, and more.
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