Profit companies

Revealed: ‘Staggering’ $3 Billion Per Day Oil Sector Profits Over Last 50 Years | Fossil fuels

The oil and gas industry has generated $2.8bn (£2.3bn) a day in pure profit for the past 50 years, new analysis has revealed.

The vast total captured by oil states and fossil fuel companies since 1970 is $52,000,000,000, giving the power to “buy every politician, every system” and delay action on the climate crisis, says Professor Aviel Verbruggen, the author of the analysis. Huge profits have been inflated by country cartels artificially restricting supply.

The analysis, based on World Bank data, assesses the “rent” secured by global oil and gas sales, which is the economic term for the unearned profit produced after deducting the full cost of production.

The study has not yet been published in an academic journal, but three experts from University College London, the London School of Economics and the Carbon Tracker think tank have confirmed the accuracy of the analysis, the with one calling the total a “staggering figure”. It appears to be the first long-term assessment of the sector’s total profits, with oil rents providing 86% of the total.

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Emissions from the burning of fossil fuels have been the root of the climate crisis and have contributed to worsening extreme weather events, including the heatwaves now hitting the UK and many other countries in the northern hemisphere. Oil companies have known for decades that carbon emissions are dangerously warming the planet.

“I was really surprised by such high numbers – they are huge,” said Verbruggen, an energy and environmental economist at the University of Antwerp, Belgium, and former lead author of a report of the Intergovernmental Panel on Climate Change.

“It’s a huge amount of money,” he said. “You can buy every politician, every system with all that money, and I think that happened. He protects [producers] political interference that could limit their activities.

Rents captured by the exploitation of natural resources are unearned, Verbruggen said: “It’s real pure profit. They captured 1% of all the wealth in the world without doing anything about it. The average annual profit from 1970 to 2020 was $1 billion, but he said he expected it to be twice that in 2022.

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Profit grabbing is holding back global action on the climate emergency, he said: “It’s really taking money away from alternatives. People in every country find it so hard to pay gas, electricity and oil bills [petrol] bill, that we have no more money to invest in renewable energy.

Part of the rent goes to governments in the form of royalties, says Professor Paul Ekins, of University College London: “But the fact remains that over the past 50 years companies have made huge money by producing fossil fuels, the burning of which is the main cause of climate change.This is already causing untold misery around the world and poses a major threat to future human civilization.

“At the very least, these companies should invest a much larger share of their profits in switching to low-carbon energy than is currently the case. Until they do, their claims to be part of the low-carbon energy transition are among the most egregious examples of greenwashing.

Mark Campanale of Carbon Tracker said: “Not only is the scale of these rents mind-boggling, but it is important to note that in the midst of a cost of living crisis caused by record high oil and gas, this flow of money to a relatively small number of oil states and energy companies is expected to double this year. Moving to a carbon-neutral energy system based on renewables is the only way to end this madness.

The Guardian revealed in May that the world’s biggest fossil fuel companies were planning dozens of ‘carbon bomb’ oil and gas projects that would take the climate beyond internationally agreed temperature limits with catastrophic global impacts. The fossil fuel industry also benefits from subsidies of $16 billion a day, according to the International Monetary Fund.

Verbruggen’s analysis used oil rent and gas rent data from the World Bank, which the bank compiles country by country and is expressed as a percentage of global GDP. He then multiplied that by the World Bank’s global GDP data and adjusted for inflation to put all figures in 2020 US dollars.

Verbruggen said oil-rich countries like Russia and those in the OPEC cartel, including Saudi Arabia, have kept rents high by limiting supply: “They’re changing market fundamentals.” Military action, such as the US-led invasion of Iraq in 2003, and political action, such as Iran’s oil export embargo, have also increased rents, a- he said. If all available oil and gas could be freely supplied to the market, the price of conventional oil would be $20 to $30 a barrel, Verbruggen said, compared to around $100 today.

There is far more oil, gas and coal in existing reserves than can be burned if the world is to limit global warming to 1.5°C, the target agreed by nations in the Paris climate agreement in 2015. Campanale said: “To stay at 1.5°C, that means [international oil companies alone] giving up about $100 trillion in potential revenue. You can see why oil oligarchs and nations controlled by political elites want to retain their fossil fuel rents, the source of their power.

May Boeve, head of campaign group 350.org, said: “These profits have enabled the fossil fuel industry to fight back against all efforts to change our energy systems. We must dismantle these rent-seeking systems and build our future on the basis of accessible and distributed renewable energies, which are more sustainable and democratic in every way.