Oil and gas earn companies 4 trillion in a year, but the fun is over

Fatih Birol, director of IEA, claims this:“The demand for oil will decrease.Countries, especially in the Middle East, must prepare for the transition"

• Fossil fuel companies made $4 trillion in 2022:it's a record.
• Larger companies have announced that they will reduce investments in clean sources.
• The fact that more is being invested in oil is bad news for the climate.

That the societies of fossil fuels have reported record profits in 2022 is not in itself new news.But that the companies themselves have decided to reduce its investments in renewables it is and it horrifies those who are worried about the fate of humanity.First because we are talking about a sector that he earned 4 trillion dollars in profits (compared to 1.5 trillion in recent years) and that the usual groups benefit from it, such as BP, Chevron, ExxonMobil, Shell and Total.Secondly, because part of this surplus will be reinvested in new fossil fuel extraction projects, particularly oil, making even those extraction sites hitherto considered inaccessible due to costs more feasible.

ExxonMobil records highest profit, BP reduces its commitments by 15%.

So, not only have these companies not reinvested in the energy transition but even have announced that they will reduce investments in clean energy sources.It's the case of BP, who announced that it will only reduce by 25 percent the production of oil&gas compared to 2019 levels, instead of 40 as announced about three years ago.

But BP she's not the only one. ExxonMobil reported 2022 earnings of $55.7 billion which is the highest profit ever recorded from a Western oil company.Then there are Chevron with 36.5 billion, Shell with around 40 billion and Total Energies with just over 20 billion.This is a fortune for shareholders:Shell said it will distribute about $35 billion to its shareholders between this year and last year.

Oil is still in high demand

The reason is that oil is increasingly in demand:from a barrel of crude oil you can obtain petrol, diesel and jet fuel.These products have much higher profit margins of basic crude oil and their price has increased significantly due to the war in Ukraine.As Alessandro Lubello, economics editor of the magazine, explains International, Indeed, the oil embargo coming from Russia has pushed fine product retailers to target the Chinese market, from where these are imported at higher prices and therefore resold on our market at higher costs.Well, the stratospheric profits of energy companies depend on all these factors.

Furthermore, the extra profits are bad news for adaptation and mitigation measures to climate change because they are a bonus that companies will continue to reinvest to make further profits in the field of fossil fuels, further increasing emissions.These profits, in fact, will be useful to make those extraction sources more accessible which up to now have not been exploited because they are too expensive.We are talking about deposits in the deep waters of the oceans or shale gas and oil in the United States, which, thanks to mega-profits, can suddenly become more profitable.

Let's remember that in the world There are 195 large fossil fuel extraction and production projects which if fully exploited will cause CO2 emissions equal to 646 billion tonnes (gigatonnes).They are the so-called climate bombs:60 percent are linked to projects already in operation, while the remaining 40 percent have not yet started.And it shouldn't do so if we want to achieve the climate goals set out in the 2015 Paris Agreement.

But the IEA warns:demand for oil will decrease

Despite these profits, countries that depend on oil and gas revenues “they should prepare to reduce their dependence from oil as demand will decrease in the long term”, said Fatih Birol, president of the International Energy Agency (IEA) during a conference in Oslo.

The countries of the Middle East should take Birol's words seriously “they must diversify their economies: in my opinion COP28 could be an excellent milestone to change the destiny of these countries”, added Birol. “It is no longer possible to manage a country whose economy depends for 90 percent on oil and gas revenues because demand for oil will decrease”, he added.

No more fossil subsidies:in 2022 they exceeded 1000 billion

Until we get rid of the question of fossil fuels, and in particular oil, energy companies will continue to supply the supply side.For this reason, effective political action is necessary which can start, for example, fromelimination of subsidies to the most polluting sources:in 2022, fossil fuel subsidies have exceeded one trillion dollars, according to the International Energy Agency (IEA).

The European Commission has just taken a step towards this direction which, under pressure from some member states, announced his resignation of the controversial Energy charter treaty, the agreement that not only protected the investments of Western oil companies in Eastern European countries but which became a tool through which companies were able to take legal action against states committed to adopting climate measures.