Big Oil's Record Profits and Buyback Splurge Spotlight 'Broken Energy System,' Critics Say

Economic and climate justice advocates on Thursday reiterated their demands for far-reaching energy reforms after Europe's two biggest fossil fuel corporations reported more than $21 billion in combined second-quarter profits and announced plans to buy back a combined $8 billion in shares in the third quarter--all while continuing to receive billions in public subsidies each year to wreck the planet.

British venture Shell posted a record-breaking $11.5 billion in profits from April through June, more than doubling its Q2 earnings compared with 2021 ($5.5 billion) and surpassing the previous quarterly high of $9.1 billion set during the first three months of 2022, which was nearly triple last year's Q1 net income of $3.2 billion.

"We must phase out fossil fuels and speed up the transition to renewables in order to overhaul our energy system."

Its French rival, TotalEnergies, made $9.8 billion in profits between April and June, up from $9 billion during the first three months of 2022. Last year, the company brought in $3.5 billion and $3 billion, respectively, during Q2 and Q1.

Fossil fuel giants raked in billions in profits last quarter "by gouging people at the gas pump," Jamie Henn, a spokesperson for the Stop The Oil Profiteering campaign, wrote on social media. "Why on Earth are we still subsidizing Big Oil?"

Trillions of dollars per year in public money has helped the oil and gas sector make more than $52 trillion in profits since 1970. That sum, which amounts to $2.8 billion dollars per day for the past half-century, has enabled the fossil fuel industry to "buy every politician" and delay lifesaving climate action, Aviel Verbruggen, the author of the analysis, told The Guardian last week.

Like other firms in the sector, Shell and Total are presently cashing in on the sky-high cost of energy. Although retailers started charging more for gasoline in 2021 as consumer demand, which took a nosedive during the early stages of the Covid-19 pandemic, began to outpace supply--deliberately suppressed at the behest of investors to boost profits--price hikes at the pump have intensified since Russia invaded Ukraine in late-February.

"The hikes in prices did not disappear into a black hole," Sheffield University political economist Richard Murphy tweeted Thursday. "They went... into corporate profits, massively increasing the divisions and stresses in our society."

Big Oil is capitalizing on the war in Ukraine by jacking up prices and rewarding shareholders with massive stock buybacks. Shell bought back $8.5 billion in shares during the first half of 2022 and just announced a $6 billion stock buyback program for Q3, Reuters reported. Total, meanwhile, bought back $3 billion in stocks during the first six months of this year and has plans for another $2 billion in share buybacks in the current quarter.

Progressive activists responded with outrage to Thursday's news.

"This announcement of yet another obscene profit for Shell is a clear sign that our broken energy system is completely unfit for purpose," Freya Aitchison, an oil and gas campaigner at Friends of the Earth Scotland, said in a statement.

"Rising energy prices are a key driver of the cost of living crisis that has plunged millions of people in the U.K. into fuel poverty, yet bosses and shareholders at Shell are getting even richer by exploiting one of our most basic needs," said Aitchison.

In addition, Shell is "worsening climate breakdown and extreme weather" by moving ahead with harmful proposals, such as expanded offshore drilling in the Jackdaw gas field, that will "lock us into" decades of increased planet-heating emissions, she continued. Experts have warned repeatedly that investing in new oil and gas projects is incompatible with the Paris agreement's goal of limiting global warming to 1.5oC.

"We must phase out fossil fuels and speed up the transition to renewables in order to overhaul our energy system and ensure that everyone has access to affordable and clean renewable energy," Aitchison stressed.

Total "is responsible for some of the most destructive fossil fuel projects on the planet, including the controversial East African Crude Oil Pipeline [EACOP] and fracking across Vaca Muerta, Argentina," 350.org noted. "It is vital that we stop the flow of money to reckless fossil fuel companies."

Thursday's announcement "shines a spotlight on the moral bankruptcy and danger posed by oil majors," the group continued. "These corporations are ruthlessly profiteering off war in Ukraine, at a time when tens of millions of people are currently suffering from the combined impacts of the climate crisis and the cost of living scandal."

"Total is currently leading a dash for gas in Africa, recently securing billion-dollar deals in Algeria and South Africa to extract and burn more fossil fuels from the continent," the group added. "Total's planned operations will be devastating for people and the planet--their actions will benefit a handful of wealthy shareholders at huge cost to local communities and the climate."

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"It is appalling that Total Energies continues to rake in obscene profits at the expense of people and the planet, more so in Africa, the continent most vulnerable to climate change," said Omar Elmawi, coordinator of Stop EACOP.

The project is "facing sustained resistance locally and globally due to the threat it poses to communities and their livelihoods as well as expected negative impacts on the environment and sensitive ecosystems in Uganda and Tanzania," Elmawi added. "We can stop EACOP and the wave of destruction it is set to leave in its wake, if we stop the flow of finance to Total."

"The future the world needs is one that no longer burns fossil fuels."

Charity Migwi, Africa regional campaigner at 350.org, said that "Total makes vague promises of job creation in the oil and gas sector while it causes significant job losses in the agricultural and tourism sector."

"Total's business has no place in Africa," Migwi added. "The future the world needs is one that no longer burns fossil fuels."

Shell and Total are two of the world's five oil supermajors; the others are Exxon-Mobil, Chevron, and BP. Bloomberg reported Tuesday that these fossil fuel giants are collectively poised for a record-shattering $50 billion in Q2 profits, with Exxon alone expected to bring in up to $18 billion, potentially doubling its massive Q1 earnings.

Lawmakers in the United Kingdom approved a 25% windfall tax on oil and gas producers' profits earlier this month, but their counterparts in France and the United States have yet to take similar action.

A whopping 80% of U.S. voters--including 73% of Republicans--support the Big Oil Windfall Profits Tax introduced by congressional Democrats in March.

Dozens of progressive advocacy groups and lawmakers have been urging President Joe Biden, House Speaker Nancy Pelosi (D-Calif.), and Senate Majority Leader Chuck Schumer (D-N.Y.) to support the measure, which would redistribute an estimated $45 billion to U.S. households.

Sen. Elizabeth Warren (D-Mass.) has said the proposal can help Democrats avoid "big losses" in November's crucial midterms, but it faces long odds given the GOP's desire to exploit voters' mounting anger at the state of the economy. Not only is it unlikely that at least 10 Senate Republicans would support advancing debate on the bill, as required due to the filibuster, but it remains unclear whether right-wing Democratic Sen. Joe Manchin (W.Va.) would vote for it.