Regan Brown
The fossil fuel industry has been a lucrative business for decades, with oil and gas companies earning billions in profits each year. In 2022, the world's top fossil fuel companies, including ExxonMobil, Shell, BP, Chevron, and TotalEnergies, reported a staggering combined profit of nearly $200 billion. This trend continued into 2023, with the same companies earning over $100 billion despite a slight dip in profits. While these companies reap enormous financial gains, the world suffers devastating losses due to climate change, with extreme weather events causing record-breaking temperatures, wildfires, floods, and severe storms. As the negative impacts of fossil fuels become more evident, the transition to clean energy becomes increasingly crucial. However, the loss of revenue streams from fossil fuels will significantly affect communities that rely heavily on this industry, and adaptation and support from governments and policymakers will be essential to navigate the challenges of the energy transition.
| Characteristics | Values |
|---|---|
| Average yearly profit of the oil and gas industry | $1.5 trillion |
| Oil and gas industry's profit in 2022 | $4 trillion |
| Total profit of ExxonMobil, Chevron, Shell, BP, and TotalEnergies in 2022 | $200 billion |
| ExxonMobil's profit in 2022 | $55.7 billion |
| Chevron's profit in 2022 | $35.5 billion |
| Total profit of ExxonMobil, Chevron, Shell, and BP in 2023 | $100 billion |
| US revenue from fossil fuels | $138 billion |
| US oil and gas industry revenue in 2023 | $244.4 billion |
| US oil and gas industry revenue in 2022 | $330.8 billion |
| Daily profit of the oil and gas industry for the last 50 years | $2.8 billion |
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What You'll Learn
Fossil fuel companies made $200 billion in 2022
Fossil fuel companies made a staggering $200 billion in profits in 2022, with the five largest Western oil and gas companies accounting for this figure. These companies, ExxonMobil, Chevron, Shell, BP, and TotalEnergies, have been labelled as "monster profits" by the UN's secretary-general, António Guterres. This windfall comes at a time when the world is experiencing record losses due to extreme weather events, which have been worsened by climate change. The fossil fuel industry plays a dominant role in causing climate change, and their profits come at the expense of global health and safety.
While these companies are making enormous profits, people around the world are bearing the cost of the devastating effects of climate change. In 2022, the United States alone experienced 18 separate climate and weather-related disasters, including droughts, floods, severe storms, and wildfires, resulting in billions of dollars in losses. The flooding in Pakistan that year was one of the most extreme events, impacting 33 million people and causing up to $40 billion in damages.
The oil and gas industry has a long history of generating significant profits, with an analysis revealing $2.8 billion in daily pure profits over the last 50 years, totalling $52 trillion. These vast sums have enabled fossil fuel companies to delay action on the climate crisis and lobby for their interests. Additionally, they continue to extract more fossil fuels, build new infrastructure, and deceive the public about climate change, locking us into a cycle of increased reliance on their products and worsening climate impacts.
To break this cycle, there are several approaches to holding the fossil fuel industry accountable. Strengthening climate risk disclosures, internalizing the costs of damages caused by their products, and continuing legal challenges through climate litigation are some ways to address this issue. It is crucial to note that the transition away from fossil fuels will impact communities differently, and support is needed to adapt, especially from the federal government, to ensure a just and sustainable future.
As we move towards clean energy, it is important to recognize that the fossil fuel industry's profits come at a significant cost to our planet and society. The record-breaking profits made by fossil fuel companies in 2022 highlight the urgent need for accountability and a transition to a more sustainable energy system.
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Oil and gas companies' profits come at the planet's expense
The fossil fuel industry's high profits come at the planet's expense. In 2023, the global oil and gas industry earned record income of more than $2.7 trillion, yet they invested just 4% of capital expenditure in clean energy. Instead, oil companies have lobbied to maintain their profits, deceived and misinformed the public about climate change, and built new infrastructure to lock us into a cycle of extraction and combustion.
Emissions from the burning of fossil fuels have driven the climate crisis and contributed to worsening extreme weather, including the current heatwaves hitting many Northern Hemisphere countries. In 2023, the US suffered 28 separate weather- and climate-related disasters, causing $92.9 billion in economic damages. These damages are just a crude measure, and the true cost is far higher when considering the loss of life, cultural heritage destroyed, and trauma endured.
The oil and gas industry has delivered $2.8 billion a day in pure profit over the last 50 years, amounting to $52 trillion. This vast wealth has enabled fossil fuel companies to "buy every politician, every system", delaying action on the climate crisis. ExxonMobil CEO Darren Woods has even stated that he aims to double the company's shale oil output by 2027, demonstrating a blatant disregard for the environment and human rights.
While fossil fuel companies profit, people suffer. In 2023, heat-trapping emissions from fossil fuels increased by 1.1%, threatening life on our planet. The fossil fuel industry must be held accountable for its actions and made to pay for the loss and damage it has caused. It is time to end the cycle of extraction and combustion and transition to a sustainable future.
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Fossil fuel profits soar while emissions reduction ambitions shrink
Fossil fuel companies are making billions in profits while the world suffers billions in climate-driven losses. In 2022, five of the world's biggest fossil fuel companies—ExxonMobil, Shell, BP, Chevron, and TotalEnergies—reported a total of nearly $200 billion in profits. ExxonMobil and Chevron, both headquartered in the United States, reported earnings of $55.7 billion and $35.5 billion, respectively, in 2022. The oil and gas industry as a whole made approximately $4 trillion in 2022, a significant increase from the average of $1.5 trillion in previous years.
While these companies are raking in huge profits, the world is experiencing record-breaking temperatures, wildfires, floods, severe storms, and other climate-related disasters. The burning of fossil fuels has been identified as a major contributor to climate change, and the extreme weather events are causing hundreds of billions of dollars in losses globally each year. The profits made by fossil fuel companies come at the direct expense of the health and safety of people and the planet.
Despite the urgent need to address climate change, some fossil fuel companies have announced that they are scaling back ambitions on reducing emissions and investing less in renewable energy projects. This is a concerning trend, as it indicates that these companies are prioritizing short-term profits over the long-term sustainability of the planet.
There is a growing movement to hold fossil fuel companies accountable for their actions and to transition away from fossil fuels towards clean energy sources. However, this transition will have economic implications, particularly for communities that are heavily reliant on revenues from the fossil fuel industry. For example, Wyoming, North Dakota, Alaska, and New Mexico derive more than 14% of their total state and local revenues from fossil fuels, with Wyoming's number rising above 50%.
To support the transition to clean energy and ensure a just and sustainable future, it is crucial to strengthen climate risk disclosures, make companies internalize the costs of the damages caused by their products, and continue to pursue climate litigation. Additionally, policymakers need to plan ahead by adopting smart tax policies and investing in new economic sectors, including clean energy.
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Fossil fuels generated $138 billion annually for the US government
Fossil fuels have long been a major source of revenue for governments worldwide. In the United States, fossil fuels generated approximately $138 billion each year between 2015 and 2020 for US localities, states, tribes, and the federal government. This substantial income stream is primarily derived from upstream production, midstream transportation and processing, and downstream consumption of fossil fuels.
Wyoming, North Dakota, Alaska, and New Mexico are the states most heavily reliant on fossil fuel revenues. In these states, more than 14% of total state and local revenues originate from fossil fuels, with Wyoming's proportion exceeding 50%. This income is vital for funding essential services such as schools, public health infrastructure, and infrastructure development and maintenance.
However, the transition to clean energy and the decline in fossil fuel usage pose significant fiscal challenges to these communities. As fossil fuel revenues decrease, governments will need to explore alternative sources of income to compensate for the losses. Clean energy may become a prominent driver of government revenue, but it may not benefit the same regions that historically relied on fossil fuels. Policymakers will need to implement smart tax policies and invest in new economic sectors, including clean energy, to address the impending fiscal shortfalls.
Furthermore, the environmental costs associated with fossil fuel consumption are enormous, primarily due to local air pollution and global warming. Removing explicit and implicit fossil fuel subsidies, which reached a record $7 trillion last year, could significantly reduce emissions and improve public health. Scrapping these subsidies is projected to prevent 1.6 million premature deaths annually and generate additional revenue for governments.
In summary, while fossil fuels have generated significant revenue for the US government, the transition to clean energy is inevitable to address the pressing environmental and health concerns associated with fossil fuel consumption. Policymakers must act swiftly to adopt emissions-reduction strategies and address the impending revenue shortfalls in communities heavily reliant on fossil fuel income.
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Fossil fuel profits enable climate crisis inaction
Fossil fuel companies are making billions in profits, while the world is suffering billions in losses due to the devastating effects of climate change. In 2022, just five companies—ExxonMobil, Shell, BP, Chevron, and TotalEnergies—reported a total of nearly $200 billion in profits. The oil and gas industry has delivered a staggering $2.8 billion a day in pure profit over the last 50 years, totaling $52 trillion. These profits give fossil fuel companies immense political power, enabling them to delay action on the climate crisis and combat efforts to transition to renewable energy sources.
The burning of fossil fuels has driven climate change, contributing to worsening extreme weather events, such as heatwaves, wildfires, floods, and severe storms. While the fossil fuel industry profits, the world incurs record losses due to these climate-driven disasters. For example, in 2022, the United States experienced 18 separate climate and weather-related disasters, each causing significant damage. The Federal Emergency Management Agency (FEMA), responsible for funding recovery efforts, is vastly underfunded and unable to meet the growing needs arising from the increasing frequency and severity of these events.
Fossil fuel companies have known for decades that carbon emissions from burning fossil fuels are dangerously heating the planet. Yet, they continue to extract and burn more fossil fuels, lobby for their interests, deceive and misinform the public about climate change, and build new infrastructure to lock us into a cycle of increased reliance on their products. This cycle needs to be broken, and accountability for the industry is crucial. Strengthening climate risk disclosures, internalizing the costs of the damages caused by their products, and continuing climate litigation are some ways to hold these companies accountable for their actions.
Furthermore, the transition away from fossil fuels will have significant fiscal implications for governments dependent on fossil fuel revenues. Between 2015 and 2020, fossil fuels generated approximately $138 billion annually for US localities, states, tribes, and the federal government. While clean energy development is crucial for addressing climate change, the loss of these revenue streams will impact communities that rely heavily on fossil fuel industries. Policymakers need to plan ahead and adopt smart tax policies and investments in new economic sectors, including clean energy, to support communities during the energy transition.
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Frequently asked questions
The oil and gas industry has made a profit of $2.8 billion a day for the last 50 years, which amounts to $3 billion a day when adjusted for inflation. This amounts to an annual profit of $1.5 trillion in recent years, which jumped to $4 trillion in 2022.
In 2023, fossil fuel companies made over $100 billion in profit.
The US oil and gas industry generated $244.4 billion in revenue in 2023, down from $330.8 billion in 2022.
Fossil fuels generate roughly $138 billion a year for US localities, states, tribes, and the federal government.
Wyoming, North Dakota, Alaska, and New Mexico are the states most dependent on fossil fuel revenues.
