Massive Earnings in Big Oil Wield Economic Dominance for Select Countries

Massive Earnings in Big Oil Wield Economic Dominance for Select Countries

Over the last 50 years, the oil and gas industry earned an average of $2.8 billion per day in profits, according to a new analysis by the World Bank that is still currently unpublished and likely the first of its kind. The assessment quantifies "rent” (a term referring to unearned profit after factoring in production costs), a figure oil-rich countries can manipulate by tightening supply, a tactic OPEC and Russia use. For example, a barrel of oil would cost an estimated $20 to $30 (versus $100 per barrel) if it were freely supplied.

Excluding $16 billion the industry receives in daily subsidies, the total profit of oil and gas companies since 1970 amounts to a massive $52 trillion, with oil rents making up 86% of that total.

Source: The Guardian, July 21, 2022.

Source: Oil Change International, March 2022.

The YEARS Project: Why Are We Subsidizing Fossil Fuels?, October 21, 2019.

NBC: Oil and Gas Companies Under Fire as Billion-Dollar Profit Numbers Come to Light, June 15, 2022.

Why This Matters

The fossil fuel rents are a source of money and power for countries with reserves, creating a massive block to necessary climate action -- the flow of energy and economic dominance rests in a limited number of hands that are holding on tight.

"It’s a huge amount of money,” Professor Aviel Verbruggen, the author of the analysis and a former lead author of an IPCC report, told the Guardian. You can buy every politician, every system with all this money, and I think this happened. It protects [producers] from political interference that may limit their activities.”

Source: The Center for American Progress, March 2022.

VICE: The Fossil Fuel Industry Wants You to Think It’s Solving Climate Change, July 14, 2021.

Carbon "Bombs” Still To Come

Oil and gas companies have 195 giant new oil and gas projects in the works that would release at least 1 billion tons of CO2 into the atmosphere over their lifetimes. More than half are already operational, with the US, Canada, and Australia responsible for some of the most significant expansions. In effect, Big Oil is "placing multibillion-dollar bets against humanity halting global heating,” the Guardian wrote in a piece investigating the projects.

Of course, we’re well past the time to stop drilling, with Secretary-General Antonio Guterres calling further exploration and drilling "delusional” and scientists saying that oil-rich countries must phase out oil and gas production by 2034 if there’s any shot at meeting the Paris Agreement’s commitments.

Euronews: UN Secretary-General says the climate crisis is placing half of humanity in 'the danger zone,' June 14, 2022.

DW: Time is running out | WMO warns 1.5 degree threshold could be topped by 2026, May 18, 2022.

Democracy Now: Bill McKibben | Latest IPCC Climate Report Underscores "Fossil Fuel Is at the Root of Our Problems," April 7, 2022.