Oil Price Rally, Massive Profits Amid Climate Concerns, Burning Holes in Consumers’ Pockets

The oil price rally is gaining serious momentum, with Brent climbing to $85.80 per barrel, the highest level since April 17. The settlement price and intra-day high have moved higher in 17 days of the last 24 trading days while the intra-day low has risen on 18 days.

Standard Chartered analysts have forecasted the largest global supply deficits in 2023 will be in August and September, deficits will continue to the first quarter of 2024. Oil companies continue to bathe in profits. The industry has a stronghold on people’s transportation choices. This means they can bring in massive profits by charging high prices, hitting the working class who don’t have other alternatives.

In the United States in 2022, oil giants Shell, Exxon Mobil, and Chevron among others raked in record profits – over $200 billion combined. Washington is ranked as one of the most profitable states in the US for the oil industry. For every gallon of gas at the pump, at the end of 2022, fuel retailers pulled a margin of 85.6 cents on top of profits embedded in the price from refiners and producers.

The oil industry blamed climate policy for the sky high prices. But experts say if the industry was truly careful and cared about the consumers, it would not just pass compliance costs onto the consumers, while themselves pocket exorbitant profits. Moreover, the industry’s concerns for the environment and the climate are just a sham.

Over the last decade, oil majors have made colorful pledges to decrease oil and gas production, slash emissions, only to walk away from them. A recent example is Shell. It made loud noises about plans to lower emissions by 35 percent by 2030, but stepped back saying it will aim for a 20 to 30 percent cut. The oil company also said it will not increase investments in renewable energy this year despite earlier promises.

The industry is slowly and steadily taking a step back from its commitments because taking a path away from fossil fuel dependence is a threat to their profits. Companies have also invested millions of dollars into faux grassroots campaigns and extensive lobbying efforts against climate policies nationally, in the US. One such campaign is “Affordable Fuel Washington”. It runs ads claiming climate policies are to blame for high gas prices.

ALSO READ: No End to Lebanon Economic Crisis, No Successor to Replace Country’s Outgoing Central Bank Governor

Dan Cohn, global energy transition researcher at the Institute for Energy Economics and Financial Analysis, said the oil industry’s climate plans should not be taken at face value. He believes they have left no doubt that their pledges were deployed for cynical political purposes, only to be ditched when they no longer suited the industry’s strategic position.

The oil industry’s climate pledges gave the impression that they don’t need to be regulated because their voluntary pledges are adequate. Oil companies are motivated by profits. And the Russia-Ukraine war has given the oil industry the bitter-sweet taste of fossil fuel profits.