Oil majors face backlash as big-profit era returns

Soaring energy prices have brought massive profits for the oil majors – along with fierce criticism from environmentalists and politicians at a time when consumers find themselves with rising bills.

The American company ExxonMobil, the French company TotalEnergies and the British giants Shell and BP last week announced profits for 2021 totaling $66.7 billion.

It marked a huge turnaround from 2020, when they posted losses as the pandemic emerged, causing lockdowns that crippled the global economy and caused crude prices to crash.

But oil and gas prices rose sharply last year, hitting $70 a barrel after briefly falling into negative territory in 2020.

Major international and US contracts hit seven-year highs in January and now sit around $90. Gas prices, meanwhile, have reached record highs in Europe.

“Oil companies have benefited from an extraordinary alignment of the planets,” said Moez Ajmi, oil industry expert at EY consulting.

In addition to rising energy prices, energy companies have been “cleaning up” their assets to keep only the most profitable ones, Ajmi said.

Companies have also stepped up cost-cutting policies that began with a previous price crash in 2014.

A gradual increase in production by OPEC and its allies has also helped.

ExxonMobil went from a loss of $22.4 billion in 2020 to a profit of $23 billion in 2021.

Shell was $20.1 billion in the green last year after losing $21.7 billion in 2020.

TotalEnergies went from a historic loss of $7.2 billion to a high profit of $16 billion in 15 years.

BP’s recovery was not as strong, falling from $20.3 billion in the red to $7.6 billion in the green.

Pump prices and utility bills, meanwhile, have gone up for consumers.

BP said the result would allow it to accelerate the “greening” of the business.

But the companies’ performance has sparked calls for a windfall tax on UK energy company profits.

“These profits are a slap in the face for the millions of people who dread their next energy bill,” Kate Blagojevic, climate manager at Greenpeace UK, said in a statement.

“BP and Shell are raking in billions from the gas price crisis while benefiting from one of the most favorable tax regimes in the world for offshore drillers,” she said.

“And these are the same companies responsible for bringing our world closer to catastrophic climate change.”

Seeking to head off a political storm, Prime Minister Boris Johnson’s government last week announced a financial support package after the national energy regulator raised prices.

The opposition Labor Party said it was not enough.

Finance Minister Rishi Sunak’s ‘energy plans’ last week left families more worried than ever,” Shadow Labor Minister Rachel Reeves tweeted after the oil company results were released.

“It’s time for Labour’s plan for a windfall tax on oil and gas producers to cut bills.”

Sunak rejected the tax idea.

Ahead of the presidential election in France in April, environmental candidate Yannick Jadot spoke out against profits being made “on the backs of the French” as “gas and gasoline bills rise for the benefit of shareholders “.

TotalEnergies CEO Patrick Pouyanne said that if the company paid more to governments, “it would be at the expense of investments, workers or shareholders”.

But in an apparent move to fend off criticism, TotalEnergies this week announced a discount at the pump in rural areas of France as well as a €100 voucher for people struggling to pay their gas bills.

The oil majors, however, could enjoy another banner year for their results, with analysts predicting prices to climb to $100 a barrel.

“The health crisis appears to be coming to an end, economic recoveries in China, the United States and Europe show no signs of waning, supply remains constrained due to a lack of oil investment over the past two years and environmental pressure,” he added. Ajmi said.

“So yes, the oil majors’ profit rebound could continue into 2022.”

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