TOWARDS THE end of the second world war Franklin D. Roosevelt attended a fateful gathering of world leaders that helped determine the course of geopolitics for decades. No, not the Yalta summit. Immediately after FDR, Churchill and Stalin had carved up the world into spheres of influence, the American president slipped away onto an US Navy vessel to meet quietly with Abdel Aziz ibn Saud, king of Saudi Arabia. In return for protection of the Sauds’ sovereignty in the Holy Land, the monarch agreed to grant American oil firms access to his country’s petroleum.
Building on the long-standing exploitation of Persian reserves by the Anglo-Persian Oil Company (now BP), the Saudi-American alliance formed the axis of oil that led Western majors to look longingly first to the Persian Gulf, then to other distant longitudes. For decades the world’s five biggest private-sector oil companies—America’s ExxonMobil and Chevron, Britain’s BP and Shell, and France’s TotalEnergies—have drilled from South America to Siberia. Now a swirl of geopolitical, economic and environmental factors is leading these “supermajors” to increasingly look not east and west but north and south.
This realignment comes as big oil’s coffers are overflowing after two years of sky-high energy prices (see chart). On February 2nd Shell unveiled annual net profits for 2022 of $42bn, more than double the figure a year earlier and its highest in over a century as a public company. That came on the heels of ExxonMobil’s announcement of a record annual net profit of $56bn. Its main domestic rival, Chevron, reported that its own net profit more than doubled, to $37bn. BP and TotalEnergies added to the haul on February 7th and 8th, respectively.
All told, those five supermajors raked in around $150bn in profits last year and could make as much again in 2023. A slug of this bounty will flow to shareholders; in January ExxonMobil said it would fork over a cool $35bn in total to its owners this…
2023-02-06 18:32:44 Where on Earth is big oil spending its $150bn profit bonanza?
Original from www.economist.com
In light of the COVID-19 pandemic and the resulting global economic crisis, major oil companies across the world are facing unprecedented challenges. With oil demand dropping dramatically, crude prices have tumbled to record lows, and the industry seems to be in dire straits.
However, it appears that the situation is not quite as bad as it first seemed. Despite the upheaval of the past few months, the world’s largest oil companies are still making huge profits, as evidenced by the recent announcement that they will be sharing a staggering $150 billion in profit.
So, where is this massive sum of money going?
For starters, oil companies have been investing heavily in renewable energy, particularly solar and wind energy. Many of the industry’s biggest players are now firmly committed to the transition to a low-carbon world, with some even setting ambitious emissions reduction targets. Indeed, total investments in clean energy by Big Oil have risen to $7.5 billion in 2020, up from just $500 million in 2019.
At the same time, oil companies are also pouring money into digital transformation, with investments in new technologies such as artificial intelligence and blockchain helping to streamline their processes and increase efficiency.
These investments are essential for oil companies’ long-term sustainability in the international marketplace. They are also helping to create new opportunities in areas such as clean energy, green technology, and digital transformation.
In addition to investing in their own growth and development, Big Oil is also turning its attention towards philanthropy. The industry is investing heavily in initiatives to reduce poverty and combat climate change, as well as supporting educational and health care projects.
Finally, oil companies are returning some of their profits to shareholders in the form of dividend payments. This is a signal to the markets that the industry is still strong, and ultimately, it helps to boost investor confidence.
Clearly, Big Oil is feeling positive about the future, despite the current crisis. With the industry investing heavily in sustainability, technological innovation, and philanthropy, it seems that the money from their $150 billion profit bonanza is being spent wisely.