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Over the past year, high energy prices have brought soaring profits for global fossil fuel producers and also an unprecedented level of public scrutiny. Oil and gas prices surged after Vladimir Putin launched an invasion of Ukraine, triggering international sanctions that upended the global energy market. And while prices have come down from their peak, this has brought an extraordinary flow of wealth into the coffers of the world's biggest oil and gas companies, known as the supermajors. The five biggest energy companies in the US and Europe, ExxonMobil, Chevron, BP, Shell, and Total collectively earned more than $200bn in profit in 2022.
So what are they doing with all that money? And what are the ethical implications around this as it relates to their role in the transition to a cleaner energy system and in society as a whole?
One big outlay has been in payouts to shareholders. Chevron, for example, has promised to spend $75bn on share buybacks in the coming years. Meanwhile, the companies have pledged to boost investment in oil and gas production, to the anger of climate activists who say they should be winding it down. ExxonMobil is planning to spend $25bn on exploration and production in 2023 alone.
But the companies are also pumping money into low carbon energy that the world needs to mitigate climate change. BP has said it will spend $8bn more than previously planned on renewables between now and 2030. But it's also expanding fossil fuel investment and walking back its earlier pledge for a big reduction in oil and gas production.
So should energy companies be allowed to make limitless gains to spend as they wish? Or do they have an obligation to society and to the planet? Is it the job of governments to hold them to account?
There have been calls for a crackdown on these massive profits. US President Joe Biden has accused oil companies of profiteering from the war in Ukraine and threatened to create a special windfall tax. The UK and the EU have already done that, imposing a higher tax rate on energy profits above a certain level for the next few years.
The situation has also added to pressure for permanently higher tax rates for these companies, or for a carbon tax to be applied at a hefty rate on their products. In the meantime, the supermajors and their shareholders will be making the most of the bumper profits while they still can.