Big Oil Is Making Record Profits While the World Burns

The world might be burning, but if it's any consolation, oil companies are making their shareholders very rich. 

While bombshell climate report after bombshell climate report prepares us for a future of flooding, extreme heat, wildfire, and mass extinction, Exxon Mobil, the world’s largest producer of fossil fuels, earned $19.7 billion between July and September, more than it brought in in any other three-month period—ever. What’s it planning to do with the windfall? Well, the company last week said it's fulfilling its “commitment to return profits to shareholders” by buying back $10.5 billion of its own stock and upping its dividend payments to investors, an effort to line stockholder’s pockets and attract more investment.

Rather than invest in a post–fossil fuel future, Exxon told investors it plans to “increase production,” even as the scientific world pleads for them to stop, to avoid catastrophic global heating.

“Wherever you look, oil and gas companies are making an absolute killing,” said Mathew Lawrence, the founder and executive director of Common Wealth, a leftist British think tank. “Those profits are then being transferred at extraordinary scale to shareholders, and that money is ultimately coming from you and me, ordinary people who are paying their energy bills.”

To put Exxon’s earnings into perspective, Apple, which was the most profitable company in the world last year, reported $20.7 billion in profits in the last three months, only slightly higher than Exxon’s profit. 

The UN, meanwhile, just issued yet another dire report noting that global heating is likely to reach up to 2.6 degrees Celsius above pre-industrial temperatures by 2100. That's more than half a degree above the Paris Agreement’s target of 2 degrees Celsius—and a full degree above the UN’s ideal target of 1.5 degrees of warming. 

Half a degree likely means the difference between occasional crop failures and having a few coral reefs left, and widespread famine and mass extinctions. Allowing temperatures to rise by the amount the UN forecasts could be catastrophic, scientists emphasize. This will increase the likelihood of extreme heat waves and expand the habitat for disease-carrying mosquitoes and ticks, they warn. 

“We're seeing companies double down, brazenly pretend that they're going to be able to produce oil and gas for another 60, 70, 80 years,” said Collin Rees, the U.S. program manager with Oil Change International, a research and advocacy organization. The stock buybacks themselves don’t increase oil production, but in earnings calls last week, major oil companies indicated that they plan to keep producing larger and larger amounts of fossil fuels. 

It’s a bonanza this year for Big Oil, and Exxon’s not the only company reporting huge profits. Shell, which reported $9.45 billion in profits in the last three months, also said it would buy up $4 billion of its own stock in the next three months. Chevron, too, reported $11.2 billion in profits and bought $3.75 billion of its own stock in the last three months. 

Rather than, say, lowering gas prices for average people, oil companies are turning their profits into wealth for the wealthy, experts said. When a company buys up its own stock, it boosts the stock's price—and makes stockholders richer, exacerbating inequality in America.

The top 10 percent of income earners own about 90 percent of stock in the United States, according to Niko Lusiani, the director of corporate power at the Roosevelt Institute. Black Americans, meanwhile, own about 1 percent of stocks.

“The buybacks and dividends are transferring profits largely to very wealthy, predominantly white households, which exacerbates the long-standing wealth and racial inequalities,” Luisiani said. 

President Joe Biden is now threatening these companies with higher taxes unless they use their profits to lower gas prices rather than boosting their stock prices. 

“If they don’t, they’re going to pay a higher tax on their excess profits and face other restrictions,” Biden said in a speech Monday.

The president asked Congress to consider a windfall profit tax on major oil companies, which would raise taxes on their profits if they’re significantly higher than what they are in an average year. 

It’s a proposal that’s unlikely to gain traction in Congress, where Democrats hold narrow majorities. But it signals that Biden, who’s criticized Exxon for making “more money than God,” is upping pressure on oil companies. 

“Oil companies’ record profits today are not because they’re doing something new or innovative,” Biden said. “Their profits are a windfall of war—the windfall from the brutal conflict that’s ravaging Ukraine and hurting tens of millions of people around the globe.”

Indeed, part of the reason oil profits are astronomical is due to the war in Ukraine. The Russian invasion created shortages, which boosted gas prices. Without lifting a finger, both experts and the president noted, big oil companies managed to expand their earnings dramatically. 

But this year hasn’t just been a benchmark year for oil profits. While these companies make tons of money, the consequences of the climate crisis have come into stark relief. 

In just the last few months, Hurricane Ian battered the Florida coastline and heat melted the roofs of buildings in China, according to the New York Times. Much of South Asia, after a heat wave, was hit by major floods due to glacial melt in the Himalayas, and the European Union found that this summer’s drought across the continent was likely the worst in 500 years. 

And yet, big oil companies still aren't transitioning to renewables.

“Our ability to increase production while reducing cost improves our competitive position, benefits consumers, and generates capital to fund meaningful investments,” said Exxon CEO Darren Woods on an earnings call with investors last week. “We've grown our production,” both digging more oil out of the ground and refining more of it. 

A new report out last week from the International Institute for Sustainable Development, an independent think tank based in Canada, found that if the planet is to heat less than 1.5 degrees Celsius by 2100, the world would have to stop all new oil and gas development now.

But experts emphasized that the earnings reports coming from major oil and gas companies indicate that these companies have every intention of operating as fossil fuel companies for decades to come—even if doing so would fry the planet. 

“It’s not as though they're not having one last dance before they shut down the party,” Lawrence said. “I think they'll be continuing on.”

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