Mercedes Mullins
Fossil fuels are a significant contributor to climate change, and companies that extract, produce, and sell these fuels are facing increasing scrutiny. The term Big Oil is often used to refer to the largest and most influential oil and gas companies, which have a powerful impact on global politics and economics. These companies, including ExxonMobil, Chevron, Shell, BP, and TotalEnergies, are responsible for a substantial portion of global carbon emissions and have been the target of divestment campaigns and climate activism. In the United States, companies like Exxon and Chevron are part of this global network of fossil fuel extraction and production, contributing to the country's position as one of the world's largest carbon emitters. Understanding the role of these companies and their influence is crucial in addressing the challenges posed by climate change and transitioning to a more sustainable energy future.
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What You'll Learn
- ExxonMobil, Chevron, Shell, BP, and TotalEnergies are top polluters
- Fossil fuel divestment campaigns target the Carbon Underground 200
- Fossil fuel companies are associated with controversial weapons
- Big Oil's economic power and influence on US politics
- OPEC cartel and state-owned oil companies control most reserves
ExxonMobil, Chevron, Shell, BP, and TotalEnergies are top polluters
ExxonMobil, Chevron, Shell, BP, and TotalEnergies are some of the world's largest publicly traded oil and gas companies, also known as supermajors. These companies are vertically integrated and operate upstream, midstream, and downstream. They are also some of the top polluters, driving climate change and preventing climate action.
In 2023, just 36 entities were responsible for half of the world's fossil fuel and cement carbon dioxide emissions, according to the Carbon Majors Project. Among these were the five aforementioned publicly traded oil companies, which together accounted for 5% of global carbon dioxide emissions from fossil fuels. Their combined emissions were 4.9% of the world's carbon dioxide pollution for that year. These companies have also been accused of "greenwashing", claiming to be transforming into clean energy companies without taking sufficient action.
The report by the Carbon Majors Project also found that eight of the nine public companies most responsible for carbon emissions in 2023 were highly active or strategic in their climate lobbying. Their lobbying efforts aimed to regulate climate-altering pollution and impede the transition to clean energy. The top five oil companies named in the report, including ExxonMobil, Chevron, Shell, BP, and TotalEnergies, did not immediately respond to a request for comment.
These companies have been profiting from the global demand for oil and gas, with ExxonMobil, Shell, Chevron, and BP collecting substantial gains in the second quarter of 2024. Despite facing challenges from climate activists and environmentalists, these companies have posted high net profits. ExxonMobil, in particular, has been involved in joint ventures and mergers, such as the Golden Pass LNG project with QatarEnergy and a potential merger with Chevron.
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Fossil fuel divestment campaigns target the Carbon Underground 200
Fossil fuel divestment campaigns are targeting the Carbon Underground 200 (CU200) – a list of the top 100 coal and top 100 oil and gas publicly traded reserve holders globally, ranked by the potential carbon emissions content of their reported reserves. The list is compiled and maintained by FFI Solutions (formerly Fossil Free Indexes), and it is used by divestment campaigns as the definition for "fossil fuel companies" in their ask. The Fossil Fuel Divestment Campaign has updated its target list to include companies that large investors, such as cities and universities, should sell off to help combat climate change.
The fossil fuel divestment campaign, launched in 2012, has gained momentum with growing awareness of the financial risks associated with the carbon bubble. The Carbon Underground 200 list provides a clear guide to companies whose business propositions are most at risk. This list is based on the 2014 IPCC scenarios and modelling, which estimates the carbon content of the reserves reported by these companies to exceed their carbon budget by 400%. This further highlights the potential for stranded assets and the urgency of divestment.
McGill University, for example, has committed to divesting from all direct holdings in fossil-fuel companies listed in the Carbon Underground 200. This decision aligns with the university's socially responsible investment strategy and sends a symbolic message about minimizing its carbon footprint. The university has also made significant progress in reducing its carbon footprint, achieving a 49% reduction in the MIP's listed equity portfolio carbon footprint between 2019 and 2022.
The Carbon Underground 200 list is not static and undergoes annual updates. In 2016, for instance, 49 new companies were added to the list, including 35 coal companies and 14 oil companies. This dynamic approach ensures that the list remains current and reflects the evolving nature of the fossil fuel industry. The annual updates also provide an opportunity to track the progress and impact of divestment campaigns, with social pressures likely contributing to a decline in emissions from companies on the list.
The Fossil Free Indexes LLC, now FFI Solutions, has played a pivotal role in providing benchmarks, research, and investment solutions that support carbon-responsible investing. Their indexes and rankings are licensed for funds, ETFs, and separate accounts, offering a concrete framework for divestment campaigns and investors seeking to align their portfolios with sustainable practices.
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Fossil fuel companies are associated with controversial weapons
Fossil fuel companies have been associated with controversial weapons, with some sources even labelling fossil fuels as "weapons of mass destruction". This is due to the negative impacts of fossil fuel extraction and use, which include contributing to climate change, undermining economic development, and causing conflict.
A report by the Fossil Fuel Non-Proliferation Treaty, "Fuelling Failure", highlights how unchecked fossil fuel production and use threaten all of the UN's 17 Sustainable Development Goals. For example, in Mozambique, multinational fossil fuel companies and banks plan to exploit natural gas reserves, evicting hundreds of families from their land. The project will sell LNG to Asia and Europe, rather than benefiting Mozambique's citizens, and the government is diverting funds to infrastructure instead of investing in renewable energy, education, and social programs.
Additionally, fossil fuel companies have been accused of exploiting the Ukraine crisis to bolster their revenues, with Russia expected to receive $321 billion from fossil fuel sales in 2022. This contradicts UN SDG 16, which stands for "Peace, Justice, and Strong Institutions".
Beyond the direct impacts of fossil fuel extraction and use, there is also a financial link between fossil fuel companies and controversial weapons. Retirement funds and investments in fossil fuel companies may also be indirectly supporting arms manufacturers. For example, an analysis of 55 retirement plans found companies linked to controversial weapons in their top holdings, including RTX Corp, Boeing, and GE Aerospace.
As a result, individuals may unknowingly be investing in companies that manufacture controversial weapons, such as cluster bombs, landmines, and nuclear weapons. This has led to the creation of initiatives like Fossil Free Funds and Weapon Free Funds, which aim to help investors align their investments with their values and avoid supporting controversial weapons manufacturers.
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Big Oil's economic power and influence on US politics
The term "Big Oil" refers to the world's largest publicly traded and investor-owned oil and gas companies, also known as supermajors. These companies include ExxonMobil, Shell, TotalEnergies, BP, Chevron, Eni, and ConocoPhillips. Together, these supermajors control around 6% of global oil and gas reserves. The term "Big Oil" emphasizes their economic power and influence on US politics, particularly their association with the fossil fuels lobby.
Big Oil wields significant economic power, with the combined value of the supermajors' stocks rising considerably following mergers and acquisitions. This economic clout provides them with influence over policymaking, job creation, trade balances, and overall economic stability. They can leverage this power to advocate for favourable policies and regulations that support their interests. For example, during the last election cycle, Big Oil spent $445 million to influence Donald Trump and Congress, with $96 million going into Trump's re-election campaign and affiliated political action committees.
The oil industry's influence on political decisions has profound and multifaceted implications, ranging from immediate economic outcomes to long-term global impacts. Their lobbying power can shape energy policies and influence voting behaviours by contributing to political campaigns. Additionally, the industry can fund advertising campaigns and grassroots initiatives to shape public opinion and create a political environment more conducive to their interests.
The complex interplay between legislative actions, regulatory frameworks, and political influence significantly drives the oil sector's evolution. Strategic alignments and divergences between government policies and energy production have far-reaching consequences for the economy, environment, and geopolitics. For instance, the 1973 oil crisis, when OPEC nations embargoed oil to the US, had long-term effects on energy independence policies.
In conclusion, Big Oil's economic power is substantial, and their influence on US politics is profound and multifaceted. Their lobbying efforts, economic clout, and ability to shape public opinion allow them to exert considerable influence over policymaking and regulatory frameworks. While there are efforts to transition towards low-carbon solutions, Big Oil's influence continues to shape the energy landscape and have global impacts.
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OPEC cartel and state-owned oil companies control most reserves
OPEC, or the Organization of Petroleum Exporting Countries, is widely regarded as a cartel by economists and political scientists. It was formed in 1960 by founding members Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, who agreed to create an organization to bring stability to the world oil market. OPEC aims to coordinate energy policies to ensure a fair price for their exported oil and a steady supply to the market.
The OPEC Conference is the organization's supreme authority, consisting of delegations usually headed by the oil ministers of member countries. The chief executive of OPEC is the secretary-general. The organization is headquartered in Vienna, Austria, and meets at least twice a year, with additional sessions as needed. Decisions are made based on unanimity and the "one member, one vote" principle.
While OPEC's structure and intent resemble a cartel, some argue that it falls short of being an effective cartel due to internal challenges. For example, OPEC members have diverse oil export capacities, production costs, and reserves, making it difficult to agree on policy decisions. Additionally, OPEC has been criticized for endemic cheating, failing to meet its own goals, and facing competition from non-OPEC nations. Despite these challenges, OPEC and its members control a significant portion of the world's oil reserves. Estimates vary, but it is generally accepted that OPEC members hold more than 80% of the world's proven oil reserves, with the bulk of these reserves located in the Middle East.
The influence of OPEC is further enhanced by its collaboration with other oil-producing nations through OPEC+. This alliance includes 10 additional major oil-producing countries, including Russia, and allows OPEC to exert considerable influence over global oil prices by coordinating production levels. By reducing or increasing oil supply, OPEC+ can manipulate prices, although individual nations' agendas and market forces can sometimes override these efforts.
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Frequently asked questions
Some companies that use fossil fuels in the US include ExxonMobil, Chevron, and Shell.
Some examples of non-US companies that use fossil fuels include Saudi Aramco, Gazprom, and China National Petroleum Corporation.
The term "Big Oil" is often used to describe the largest oil and gas companies, specifically the supermajors, which include ExxonMobil, Chevron, Shell, BP, and TotalEnergies.
