A new analysis has disclosed that the oil and gas industry has delivered $2.5bn a day in profit for the past 50 years.
According to Professor Aviel Verbruggen, the analysis’ author, the massive sum collected by petrostates and fossil fuel industries since 1970 is $52tn, enabling the potential to “purchase every politician, every system” and delay action on the climate catastrophe we currently face.
The study has not yet been released in an academic journal, but according to The Guardian, three experts from University College London, the London School of Economics, and the thinktank Carbon Tracker confirmed the accuracy of the analysis, with one calling the total a “staggering quantity”. It appears to be the first long-term evaluation of the oil and gas sector’s total profits, which it shows to have been inflated by country cartels artificially restricting supply, with oil rents accounting for 86% of the total.
Based on World Bank statistics, the analysis calculates the “rent” secured by global oil and gas revenues, which is the economic term for the unearned profits gained after deducting the whole cost of production.
Verbruggen said that the profit has captured 1% of global wealth “without doing anything for it”, and that from 1970-2020, the annual profit of oil and gas was $1tn but he expects this to go twice as high in 2022.
Paul Ekins, a professor at University College London, told The Guardian that part of the “rents” goes to governments as royalties and that the burning of these fossil fuels contributes significantly to climate change.
“This is already causing untold misery around the world and is a major threat to future human civilisation. At the very least these companies should be investing a far greater share of their profits in moving to low-carbon energy than is currently the case. Until they do so, their claims of being part of the low-carbon energy transition are among the most egregious examples of greenwashing,” he said.
Emissions from the combustion of fossil fuels have fueled climate change and exacerbated extreme weather, such as the recent heat waves affecting the UK and many other countries in the Northern Hemisphere. For decades, oil companies have known that carbon emissions were dangerously warming the world.
Mark Campanale, at Carbon Tracker, told The Guardian: “Not only is the scale of these rents eye-watering, but it is salient to note that, in the midst of a cost of living crisis caused by record oil and gas prices, this flow of money to a relatively small number of petrostates and energy companies is set to double this year. Shifting to a carbon-neutral energy system based on renewables is the only way to end this madness.”
According to the International Monetary Fund, the fossil fuel industry benefits from $16bn in subsidies a day. This is in spite of a previous investigation by The Guardian in May of this year finding that the total emissions of imminent fossil fuel developments would continue to push the Earth past its Paris-aligned 1.5°C global warming target and a previous analysis by Carbon Tracker discovering that around 27% of oil and gas company developments are nonviable in a world aiming for 1.65°C of warming.