While the energy crisis is escalating at all levels worldwide, the fossil fuel industry is making record profits. Oil companies reported a huge profit increase in the second quarter from the same period last year. United Nations Secretary-General Antonio Guterres described the earnings as “immoral” and called for the introduction of a windfall tax for oil companies.
As the energy crisis continues, oil companies are achieving record earnings. UN Secretary-General António Guterres urged governments to tax extra profits in the oil and gas sector and use the money to support the vulnerable population.
The secretary-general said that such profits in the oil sector are unacceptable because people around the world are facing financial ruin.
Guterres: I urge all governments to tax these excessive profits and use the funds to support the most vulnerable people through these difficult times
“The combined profits of the largest energy companies in the first quarter of this year are close to USD 100 billion. I urge all governments to tax these excessive profits and use the funds to support the most vulnerable people through these difficult times,” Guterres said.
Oil profits rise in times of crisis
United States–based oil giant ExxonMobil generated a net profit of USD 17.9 billion in the second quarter of 2022, compared to USD 4.69 billion in the same quarter last year.
ExxonMobil reported net income of USD 17.9 billion for the second quarter, over three times more than for the same period of last year
In the second quarter, Shell increased its profits by more than twice. The company reported net income of USD 11.5 billion, up from USD 5.5 billion in the same period last year. Chevron earned USD 11.62 billion, and BP (formerly British Petroleum) earned USD 8.45 billion from April to the end of June.
A new analysis has shown that the fossil fuel industry made average profits of USD 2.8 billion per day over the last 50 years.
The fossil fuel industry generated a profit of USD 2.8 billion per day or USD 1 trillion per year over half a century
The analysis based on World Bank data has been validated by experts from the University College London, London School of Economics, and think tank Carbon Tracker, Guardian reports.
The fossil fuel industry’s average annual net income from 1970 to 2020 amounted to USD 1 trillion, while it is set to come in two times higher in 2022.
Aside from profits and subsidies, the fossil fuel industry has successfully lobbied the governments from the Group of 20 for an additional USD 151 billion under the COVID-19 recovery package.
UN appeal for aid to vulnerable
The UN secretary-general called for support for the most vulnerable and the transition to renewable energy sources.
The record profits from oil and gas during the global energy crisis were the result of “grotesque greed”, he stressed.
“It is immoral for oil and gas companies to be making record profits from this energy crisis on the backs of the poorest people and communities, at a massive cost to the climate,” Guterres said.
Many developing countries are drowning in debt, without access to finance, and “could go over the brink,” he added.
Guterres: We are already seeing the warning signs of a wave of economic, social, and political upheaval that would leave no country untouched
“We are already seeing the warning signs of a wave of economic, social, and political upheaval that would leave no country untouched,” Guterres warned.
Global energy access crunch
Big Oil’s record profits have bizarre dimensions compared with the uncertainty that has prevailed in many sectors of the economy and affects people across the planet.
Due to the rise in energy prices, global inflation has reached a 40-year peak. Experts are warnings a recession is looming.
The UN Global Crisis Response Group (GCRG) stressed that governments must find the most efficient ways to finance energy solutions to protect the most vulnerable sections of the population.
GCRG recommends the introduction of windfall taxes on the largest oil and gas companies and urges a transition to renewables.
Governments need fiscal space to support the energy security of the most vulnerable populations and to avoid worsening energy poverty levels and a total loss of access to energy.
If there is a potential “scramble for fuel,” only the countries that can pay the highest prices would have access to energy
There are growing fears that energy prices may become unattainable for many developing countries, especially for the most vulnerable communities. If there is a potential “scramble for fuel,” only the countries that can pay the highest prices would have access to energy, warns the GCRG brief.
Renewable energy often has the lowest cost with the shortest installation time and provides countries with energy security, the UN Crisis Response Group said in the report.
The international body concluded that renewable energy sources reduce future exposure to the volatility of oil, gas, and coal prices.