Big Oil Still Raking It In as Public Pays for Pollution

Big Oil once again realized billions of dollars in profits in the first quarter of 2023, while communities and the climate suffer from the burning of fossil fuels. Scientists found that $77 billion worth of nationwide health impacts every year can be attributed to air pollution from U.S. oil and gas production, according to a study published earlier this month in the journal Environmental Research: Health. U.S. oil and gas production contributed to 7,500 excess deaths, 410,000 asthma attacks, and 2,200 new cases of childhood asthma across the U.S. in 2016. Meanwhile, new signs of the extremity of accelerating climate change are appearing daily–a notable example: 2023’s extraordinarily high sea surface temperature readings. 

As part of our ongoing series tracking Big Oil profits, here’s the latest snapshot of the earnings of the six largest fossil fuel companies with operations in the U.S. for the first quarter of 2023: 

Between June 2022 and May 2023, the price of oil has fallen from nearly $120 per barrel to under $75 per barrel. Despite the significance of that drop, this quarter’s results reveal Big Oil’s ability to remain extraordinarily profitable across a variety of commodity price scenarios. Part of the reason? Taxpayers continue to directly subsidize the fossil fuel industry with upward of $15 billion a year. And what happens when those subsidies aren’t actually needed? A study by the Stockholm Environmental Institute reported that, “...subsidies (including exemptions) either encourage more extraction than would otherwise be economically viable, or flow to excess profits.” 

While $15 billion in direct subsidies is an astonishing sum, the IMF estimates that the true annual cost to taxpayers is over $660 billion. The number encapsulates what we might call the “full annual societal cost” fossil fuels. Due to overly permissive regulations and the absence of regulations, industry can simply ignore many of the societal costs it imposes, including environmental harms, cleanup costs, and community health costs. In other words, taxpayers prop up the profits of Big Oil, while the industry avoids most accountability. The industry’s continued sky high profits despite falling oil prices highlights how antiquated and excessive taxpayer subsidization–both direct and indirect–of the fossil fuel industry is. 

In the first quarter of this year, the six oil and gas producers analyzed here also announced $19.2 billion in share repurchases. This trend carries over from 2022 and shows how Big Oil continues to focus on maximizing earnings for its shareholders rather than making the necessary investments to transition to fossil free energy sources or cleaning up pollution harming communities. 

These profits, share buybacks, and declared dividends raise difficult questions about the behavior of Big Oil and its continued reluctance to consider the risk of its own business model in a rapidly warming world. Boards of directors at fossil fuel majors ought to fulfill their fiduciary duties to shareholders by committing to rapidly transition out of fossil fuels and increase investments in the renewable energy transition. Warming above 1.5 degrees Celsius is certainly not in the best financial interest of the business and the shareholders due to the significant economic risks that could completely undermine their ongoing survival as companies. 

Intensifying climate change caused by burning fossil fuels creates existential risks for fossil fuel production and transport. By maintaining fossil fuels development as the core of the industry’s business, it does a disservice to the shareholders and the planet. Decisions to continue fossil fuel expansion risk trillions of dollars worth of stranded assets as demand for fossil-energy falls and renewable energy begins powering the economy of the future. Now is the time for Big Oil to be accountable for its role in perpetuating the climate crisis and change course toward making renewable energy a core element of its future business strategy.