The war in Ukraine triggered surges in oil prices, with oil giants’ profits soaring even as governments promised a greener era, Politico reported.
Profits are soaring, marking a record year in the United States. Revenues are so high that the industry is ready to commit billions of dollars in incentives that US President Joe Biden is proposing for wind farms, battery minerals and carbon-carrying pipelines.
On November 30, Dubai’s Expo City, a showcase for the United Arab Emirates’ oil wealth, will host the next climate summit to prove that oil and gas producers are thriving, not shrinking, in an age of ambitious green programmes. Kevin Book, managing director at the consulting firm ClearView Energy, commented:
The death of the oil industry has been greatly overstated. The realities of demand and the limitations of alternatives haven’t changed.
The Paris-based International Energy Agency reported last month that “the beginning of the end of the fossil fuel era” may be approaching, with demand for oil, natural gas and coal expected to peak by the end of this decade.
Two US oil and gas giants are about to buy rivals with untapped reserves: Chevron is purchasing Hess for $53 billion, while Exxon Mobil is spending about $60 billion to buy a Texas company with vast land holdings in the state’s fracking hotbed.
Europe’s biggest industry leaders, BP and Shell, are also firmly basing their businesses on oil and gas while reneging on their promises to go green.
All the companies advertised their investments in cleaner technologies such as carbon capture, geothermal energy and the extraction of raw materials used in batteries. They promised to reduce climate pollution. However, Senator Jeff Merkley, a Democrat from Oregon, called the statements “99 per cent greenwashing.”
What they’re trying to do is protect their established ownership of fossil assets.
Biden’s promise to avert climate catastrophe included a 2020 campaign pledge to halt new drilling on federal land, which could have crashed oil company stock prices, according to market analysts. But instead, the administration gave the green light to a slew of fossil fuel projects, including oil drilling in Alaska and a natural gas pipeline in the Appalachian Mountains.
The industry is preparing to take advantage of the billions of dollars that Democrats in Congress and the Biden administration have allocated for new climate technologies. Exxon Mobil also announced plans to begin drilling ancient salt water in Arkansas and extract lithium, an important mineral for electric car batteries.
Some companies are reneging on their promises to reduce carbon emissions. Earlier this year, BP announced it would cut carbon dioxide emissions from energy production by 20-30 per cent by 2030, down from a previous promise of a 35-50 per cent reduction.
“Action is needed to accelerate the transition. And — at the same time — action is needed to make sure that the transition is orderly, so that affordable energy keeps flowing where it’s needed today.”
Shell also stated that it would invest less in renewable energy generation than it had originally planned, citing low profits from the business. However, Shell spokesperson Curtis Smith said the company remains committed to achieving zero greenhouse gas emissions by 2050.
BP also stated that it remained committed to reducing carbon dioxide emissions. The company plans to invest $60 billion by the end of the decade in electric vehicle charging, low-carbon hydrogen, renewable energy and the use of plant-based ingredients to make fuel.
Chevron advertised plans to develop geothermal energy and reduce greenhouse gas emissions from its operations, but also signalled that it is marching full steam ahead in its efforts to produce oil and natural gas.
It’s very difficult to change as rapidly as some people would like. There’s massive investments, trillions of dollars, in the existing system that has evolved over 150 years.
Don Wuebbles, a professor emeritus of atmospheric science at the University of Illinois who led a congressionally mandated report on climate science in 2017, asked:
“Why aren’t they out there searching for alternatives helping us make the conversion? They’re gonna spend their money looking for more oil. …They’re full speed ahead. That’s the problem.”
Exxon spokeswoman Erin Szeligowski stated that the company’s commitment to reducing emissions from its own operations, as well as those of other companies, by channelling low-carbon solutions was “evident.”
We’ve built an entire business dedicated to this goal, and are investing $17 billion on lower emissions initiatives over the next four years to do so.
According to analysts, two major events helped explain the resilience of the oil and gas sector. First, the pandemic temporarily collapsed oil demand, benefiting more efficient and wealthy producers who were able to buy out weaker competitors. Second, the war in Ukraine drove up oil and gas prices, creating new financial incentives for oil production.
Oil companies face pressure not only from shareholders worried about profits, but also from politicians spooked by recent inflation.
“What is everyone worried about? Inflation. If you don’t have stable domestic gas or oil resources, you become very exposed to whatever is happening in the world. And that’s a very worrying thought to politicians.”
Studies have shown that global temperatures are projected to rise by almost 4 degrees Celsius by the end of the century. The 2015 Paris Agreement set an official target of 2 degrees, and a more ambitious goal of 1.5.
The Global Methane Pledge has led 150 countries to back a pact to reduce methane pollution 30 per cent below 2020 levels within this decade.
It’s a huge multiplier effect to avoid methane emissions or to quickly stop them. That is the race that we are on now.
These actions have given courage to other countries, especially developing countries with undeveloped oil and gas reserves, to pursue the possibility of utilising their own fossil fuel resources, which will be a major theme of the Dubai talks. David Waskow, director of the World Resources Institute’s international climate initiative, stated:
“Unfortunately, a number of countries are going in the wrong direction on fossil fuel production if the world is to combat climate change. We’re clearly doing expansion of oil and gas.”
