Apr 04, 2022
CEOs of major oil and gas companies have been called to testify before at least three congressional committees about their record profits as Russia wages an unjust war in Ukraine and gas prices remain volatilely high, disproportionately affecting low-income and fixed-income families. The oil and gas industry has been in the spotlight for its role in the humanitarian catastrophe whose effects are rippling across the globe. It's no wonder these companies are spinning up a PR campaign to promote their businesses as the answer to our problems, publicly withdrawing from Russia, and showing up at the White House to offer support to the Biden administration's efforts to end the invasion and limit its economic fallout.
Together, BP, Chevron, ExxonMobil, and Shell amassed more than $65 billion in profits in 2021.
But in reality, the oil and gas industry is trying to have it both ways. We can't let them get away with it, and one way to hold them accountable is for Congress to continue to expose and challenge their self-serving deception and pursue clean energy solutions that truly benefit people in the United States and around the world.
Here's how this industry's response to the war is its latest display of hypocrisy and disinformation.
Climate Action is the Solution, Not the Problem
(This is a corollary to my colleague Julie McNamara's observation that fossil fuels are the problem, not the solution. Read more here.)
However, policies to deliver on the Biden administration's commitment to cut US heat-trapping emissions by 50 to 52 percent from 2005 levels by 2030 have not yet been enacted and implemented. And removing health, safety, and environmental protections will not magically increase fuel supply or reduce prices at the pump--while it certainly will impose significant burdens on communities and ecosystems.
Moreover, the push by the American Petroleum Institute (API) to use the war as an excuse for stalling or rolling back the transition to renewable energy gives the lie to climate pledges by major oil and gas companies that lead the trade association.
Last October, the CEOs of BP, Chevron, ExxonMobil, and Shell trotted out a host of climate claims, under oath, at a House Committee on Oversight and Reform hearing. In the past six months, each of these companies has made or updated its net-zero pledge (BP, Chevron, ExxonMobil, Shell). Yet they all oppose proposals by their own shareholders to set and implement short-, medium-, and long-term targets aligned with the Paris agreement's global temperature goal.
A recent peer-reviewed paper by Mei Li, Gregory Trencher, and Jusen Asuka found that all four of these companies' climate claims are greenwashing, because their actions and investments don't match up with their promises. Failure to back up words with actions can be a legal liability, as Shell is discovering through a Dutch court ruling last year and a new lawsuit announced by the UK-based environmental organization Client Earth this month.
API, for its part, seems to understand these risks: The trade association expressed concern about the US Securities and Exchange Commission's proposed new rules requiring publicly traded companies to include climate-related disclosures in their regular reports for investors. For fossil fuel companies and trade associations, talking about climate change was all fun, games, and PR until some people--scientists, lawyers, financial regulators--insisted that they get serious about addressing the climate crisis.
Russia's war in Ukraine and its global implications have blown the oil and gas industry's cover, revealing the same old climate obstruction and deception beneath the surface.
Oil and Gas Production Does Not Equal Energy Security
Oil and gas companies are hell-bent on convincing us that now is the time to increase drilling in the United States, build new infrastructure, revive projects such as the Keystone XL pipeline, and issue leases in the Arctic National Wildlife Refuge.
API admitted that "increasing American oil and gas production will not help Ukraine today"--and then implied that the Biden administration might have deterred Russia's attack by supporting US oil and gas production months ago.
But as my colleague Julie McNamara explained, the industry can't ramp up production fast enough to make a difference anytime soon. We have to look past these blatantly opportunistic dead-ends and implement real, long-lasting solutions instead.
Furthermore, there's ample evidence from around the globe that nations whose economies rely heavily on oil and gas extraction are less secure and less stable than those that are less dependent on fossil fuel resources. The "resource curse" plagues extractive economies with deep-seated inequity and undemocratic governance.
Which brings us to the next point.
Putin Is Not Our Friend
Major oil and gas companies have a long history of working with autocratic governments and capitalizing on geopolitical conflicts in pursuit of higher profits. This is the case with the current war being waged against Ukraine by Russia, and (as I learned from my past work with EIRIS Conflict Risk Network) is also true of current and past conflicts in Burma/Myanmar, Equatorial Guinea, Nigeria, and Sudan.
BP, Shell, and ExxonMobil have already announced withdrawals from their investments in Russia. (Chevron, which says it has "very little exposure to Russia," has not). However, the industry and its surrogates actively defended these investments until very recently, including by lobbying against wide-ranging sanctions on Russia. Following the invasion, the oil and gas lobby did not call for sanctions on Russia's oil and gas sector--and some industry-backed groups still oppose crucial sanctions on President Putin and his cronies.
While it's good to see these companies stepping away from these investments in Russia, such actions don't absolve them of responsibility for decades of funding Putin's regime and transferring key technologies to the Russian oil and gas industry. They did not withdraw in response to Russia's 2014 invasion of Crimea, and according to new research by Global Witness, Greenpeace USA, and Oil Change International, nine European and US fossil fuel companies have paid a total of $15.8 billion in taxes and fees to Russia since then.
These companies clearly bear some responsibility for fueling Putin's war machine.
Oil and Gas Profits Benefit the Few, Not the Many
President Putin and his cronies aren't the only ones raking in billions from the oil and gas industry. Together, BP, Chevron, ExxonMobil, and Shell amassed more than $65 billion in profits in 2021. They're not even close to sufficiently investing those profits in renewable energy or other truly clean energy solutions, which still account for only a tiny fraction of the oil and gas industry's total capital expenditures.
Even as API tries to defuse public outrage, its members are not reducing their profit margins to alleviate the burden of high gasoline prices on those who can least afford spiking energy costs--low-income and fixed-income households. (If you want to understand why gas prices are so volatile, check out this blog by my colleague Jeremy Martin).
Some, such as Marathon Oil and Occidental Petroleum, are not even increasing oil and gas production, choosing to prioritize raising dividends and buying back shares from their current investors. BP announced it will repurchase $1.5 billion worth of shares using surplus cash from 2021. Chevron will buy back $5 billion to $10 billion of stock each year. Shell has begun a share buyback of as much as $8.5 billion. ExxonMobil has initiated a $10-billion share repurchase program.
Stock buybacks, by definition, benefit current shareholders. The rich literally get richer while everyone else falls behind. Buybacks are dangerous to the economy, resulting in increased income inequality, employment instability, and weak productivity.
People trying to fill up their tanks to get to work or school or the grocery store recognize these financial machinations as corporate greed. And as Jeremy Martin explains in his blog, the only sure solution to the many problems caused by oil is to use less oil.
Congress Should Investigate--and Act
As oil and gas industry profits rise while Ukrainians suffer from Russia's ongoing assault and consumers worldwide feel the squeeze of high energy costs, three congressional committees have called corporate CEOs to testify, starting next week.
- House Natural Resources Committee Chair Raul Grijalva (D-Ariz.) invited the CEOs of EOG Resources, Devon Energy Corporation, and Occidental Petroleum--which have the most unused permits for drilling on public lands and waters--to testify on Tuesday, April 5, about the fossil fuel industry's failure to stabilize US gasoline prices. The executives refused to appear, suggesting they can't defend their corporate conduct or they think they're above the law. Either one is a bad look.
- Meanwhile, the CEOs of BP, Chevron, Devon Energy Corporation, ExxonMobil, Pioneer Natural Resources, and Shell USA will testify at a House Energy and Commerce Committee hearing on Wednesday, April 6, at 10:30 a.m. EDT. Chair Frank Pallone (D-N.J.) asked the executives to answer for their companies business practices and address the industry's impact on consumers.
- Chair Maria Cantwell (D-Wash.) of the Senate Committee on Commerce, Science, and Transportation has announced an upcoming hearing to examine the impact of the surge in petroleum prices on commerce and consumers. She has invited executives of BP America, ExxonMobil, and Pioneer Natural Resources to testify.
Ahead of these hearings, a Big Oil Windfall Profits Tax bill has been introduced by Sen. Sheldon Whitehouse (D-R.I.) and Rep. Ro Khanna (D-Calif.). Designed to curb oil industry profiteering and provide relief from high gas prices, the bill would return revenue to consumers in the form of a quarterly rebate that would phase out for single filers who earn more than $75,000 annually and joint filers who earn more than $150,000 annually.
According to a recent poll, 87 percent of voters favor a crackdown on price gouging by oil companies, and 80 percent--including 73 percent of Republicans--support the specific idea of a windfall profits tax on Big Oil. Organizations such as Amazon Watch, Indigenous Environmental Network, and People vs. Fossil Fuels have expressed support for the windfall profits tax, and a new Stop the Oil Profiteering campaign has launched.
Taxing obscene corporate profits cannot repair all the damage done by the oil and gas industry to the climate, environmental justice communities, or the rights of people and nature, but it could reduce the incentive for Big Oil to take advantage of war, mass displacement, and economic disruption--and provide some financial support for struggling individuals and families.
And Congress standing up for people, against oil and gas industry self-interest, is what we need to secure a robust package of investments in clean energy, environmental justice, and jobs. Congressional action to hold oil and gas corporations accountable can also build momentum for climate accountability litigation and shareholder advocacy leading up to this spring's corporate annual meetings.
© 2023 Union of Concerned Scientists
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