Big Oil rakes in record profit haul of nearly $200 billion, fueling calls for higher taxes

08:14 08 February in Latest News

The West’s five largest oil companies raked in combined profits of nearly $200 billion in 2022, intensifying calls for governments to impose tougher windfall taxes.

French oil giant TotalEnergies on Wednesday reported full-year profit of $36.2 billion, doubling last year’s total, as fossil fuel prices soared following Russia’s full-scale invasion of Ukraine.

The results see TotalEnergies join supermajors Exxon MobilChevronBP and Shell in recording a massive upswing in annual profits, after Exxon’s 2022 haul of $56 billion marked a historic high for the Western oil industry.

Altogether, the five Big Oil companies reported combined profits of $196.3 billion last year, more than the economic output of most countries.

Flush with cash, the energy giants have used their bumper earnings to reward shareholders with higher dividends and share buybacks.

Agnès Callamard, secretary general of human rights group Amnesty International, described Big Oil’s vast profits as “patently unjustifiable” and “an unmitigated disaster.”

“The billions of dollars of profits being made by these oil corporations must be adequately taxed so that governments can address effectively the rising cost of living for most vulnerable populations and better protect human rights in the face of multiple global crises,” Callamard said in a statement.

Activists from Greenpeace set up a mock-petrol station price board displaying the Shell's net profit for 2022 as they demonstrate outside the company's headquarters in London on Feb. 2, 2023.
Activists from Greenpeace set up a mock-petrol station price board displaying the Shell’s net profit for 2022 as they demonstrate outside the company’s headquarters in London on Feb. 2, 2023.
Daniel Leal | Afp | Getty Images

Big Oil executives have sought to defend their rising profits amid a barrage of criticism from campaigners — as well as outrage from the White House — typically highlighting the importance of energy security in the transition to renewables and suggesting higher taxes could deter investment.

“Ultimately, taxes are a matter for governments to decide on. We, of course, engage and provide perspectives and the key perspective that we try to provide is a context around the fact that companies like ourselves that need to invest multiple billion dollars to support the energy transition require a secure and stable investment climate,” Shell CEO Wael Sawan said Thursday.

His comments came shortly after Shell reported its highest-ever annual profit of nearly $40 billion, comfortably surpassing its previous record of $28.4 billion in 2008.

“For example, windfall taxes or price caps simply erode confidence in that investment stability and so I do worry about some of the moves being made,” Sawan said. “I think there is a different approach that needs to be had which is to really draw investment capital at a time when we need to be able to embed energy security into the broader energy system here in Europe.”

The CEO of Saudi Aramco, the world’s largest energy company, has previously warned about the dangers of pressuring oil companies through higher taxes.

Asked by CNBC’s Hadley Gamble last month if a windfall tax on oil profits was a bad idea, Saudi Aramco’s Amin Nasser replied, “I would say, it’s not helpful for them [in order] to have additional investment. They need to invest in the sector, they need to grow the business, in alternatives and in conventional energy, and they need to be helped.”

Nasser said the transition to renewable technologies required significant investment, and this is likely to take a hit if companies face increased taxation.

“We need to see the support from the policymakers, and from the capital markets at the same time,” Nasser said at the World Economic Forum in Davos, Switzerland.

‘People cans see the injustice’

Separately, BP CEO Bernard Looney on Tuesday sought to defend the company from criticism after reporting record 2022 profits of $27.7 billion, saying the British energy major was “leaning in” to its strategy to provide the world with the energy it needs.

BP, which was one of the first energy giants to announce an ambition to cut emissions to net zero by 2050, had pledged emissions would be 35% to 40% lower by the end of the decade.

It said Tuesday, however, that it was now targeting a 20% to 30% cut, saying it needed to keep investing in oil and gas to meet demand.

“We’re leaning into our strategy today,” BP’s Looney said. “We’re announcing up to $8 billion more investment into the energy transition this decade and up to $8 billion more into oil and gas in support of energy security and energy affordability this decade.”

Activist investor group Follow This was sharply critical of the move.

“If the bulk of your investments remain tied to fossil fuels, and you even plan to increase those investments, you cannot maintain to be Paris-aligned, because you will not achieve large-scale emissions reductions by 2030,” said Mark van Baal, founder of Follow This.

“People can see the injustice of paying eye-watering energy costs while big oil and gas firms rake in billions,” said Sana Yusuf, climate campaigner at Friends of the Earth.

“Fairly taxing their excess profits could help to fund a nationwide programme of insulation and a renewable energy drive, which would lower bills, keep homes warmer and reduce harmful carbon emissions,” Yusuf said.



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