Oil Companies' Profits

 

The United States’ negotiations to end its war with Iran are at yet another standstill. Nearly six months after President Donald Trump announced military operations would last only a few weeks, the Strait of Hormuz remains closed and Iran has demanded a list of concessions from the U.S. in order to reopen it. 

Oil companies have been making the most of the uncertainty. As The Guardian reported last week, eight of the largest oil producers together made more than $90 billion — double their combined profits from the same time span a year ago — in just three months during the first full financial quarter since the start of the war. 

At their peak, oil prices reached more than $126 a barrel. Based on available data, the paper reported, eight leading oil companies raked in more than $700,000 of profit “every minute over the spring quarter.” The most profits were earned by Saudi Arabia’s Aramco, whose recent “fossil fuel production has made it responsible for more carbon emissions than any company in history.” 

Other firms on the list are also pumping out more emissions, while at the same time cutting back on earlier pledges to transition toward cleaner forms of energy. BP, for example, according to The Guardian, has been cutting the amount it spends on green energy since it dropped its environmental ambitions in a “fundamental reset” early last year, reducing its annual energy transition budget from $5bn to $1.5bn-$2bn. …

In recent years BP has spun off its UK offshore windfarms into a joint venture and sold its US onshore wind business and [has] announced it would sell its $4bn US biogas business, which captures methane from landfill sites and is the largest renewable gas producer in the US.

In the U.S., meanwhile, Trump has given politically connected oil companies loans and access to strategic oil reserves, allowing them to make millions purchasing publicly owned resources. At the same time, the president — likely with November midterms and flagging approval ratings in mind — has criticized the companies for “making too much money” and warned that they may be forced to return their profits. 

This criticism does not extend to the oil companies’ role in driving this summer’s extreme weather, including historic heat waves in Europe, Japan and South Korea. In Europe, extreme heat has impacted one of the continent’s energy systems designed to be shielded from the vicissitudes of global petroleum supply. 

As described by the German news site Deutsche Welle, two French nuclear power plants were taken offline in July due to soaring temperatures. Whether this signals a trend that could “develop into a Europe-wide shortage” will notably depend, in part, on Europe’s “reserves of wind and solar power.”

Read more about the oil industry’s Iran war bonanza here and climate change’s impact on energy production here, here and here.

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