Shell, one of the largest fossil fuel companies in the world, announced record profits of €11.3 billion as oil and gas prices soar, as the energy giant benefited from soaring oil and natural gas prices fueled by Russia’s war in Ukraine. BP saw its highest profit in 14 years. ExxonMobil reported a whopping $17.85 billion profit for the second quarter alone. Across the board, oil companies surged to enormous profits, as consumers in many countries are struggling to pay their bills.
The UN Secretary-General Antonio Guterres took aim at the fossil fuel sector and its record profits so far, calling for counties to be tougher on oil and gas companies and tax them more, using this tax to ease the impact on the world’s most vulnerable people.
“It is immoral for oil and gas companies to be making record profits from this energy crisis on the backs of the poorest people and communities and at a massive cost to the climate,” said Guterres, as he presented a report on the impacts of Russia’s invasion of Ukraine. “Many developing countries, drowning in debt, could go over the brink.”
Guterres “urged” governments to impose new taxes on the “excessive profits” of fossil fuel companies and use that money to support the most vulnerable people. And he urged people to send a clear message to oil and gas companies and their financers that their “grotesque greed” is affecting the poorest while “destroying our common home.”
While questioning the fossil fuel industry’s profits, the UN chief also asked rich countries to do much more to help developing ones transition to cleaner energy sources. “Developing countries don’t lack reasons to invest in renewables,” said Guterres. But they aren’t given any social, technical, or financial support from developed countries, he added — which is threatening the planet’s transition to renewable energy.
Private and multilateral finance for the energy transition has to significantly increase, Guterres said. He cited an estimate from the International Energy Agency (IEA) that renewable energy investments have to increase by a factor of seven to meet decarbonization targets. The IEA has called on countries not to invest in fossil fuels anymore and instead use the money to support the development renewables.
“All countries — and especially developed countries — must manage energy demand. Conserving energy, promoting public transport, and nature-based solutions are essential,” Guterres stressed, asking to better use energy resources. “We need to accelerate the transition to renewables, which in most cases are cheaper than fossil fuels.”
The spoils of war — for oil companies
The new UN report goes through the effects of Russia’s invasion of Ukraine on the world, from the energy to the food sector. A total of 345 million people will be food insecure or at high risk of food insecurity in over 80 countries by the end of the year, the UN estimated, implying an increase of 47 million acutely hungry people due to the war.
Prices of commodities are still high but stabilizing, with the food price index of the FAO declining in June and 3.3% down from its historic high in march, the UN said. Crude oil prices are now below $100 per barrel and have remained stable. Shipment costs have also begun to decrease, especially for bunker and tanker ships that are correlated with commodities. Overall, however, fuel prices remain high as demand is larger than usual, with Europe bracing to prepare for a winter without Russian gas.
The war and instability is causing cascading difficulties in all regions. High inflation has deteriorated socioeconomic prospects for people, affecting the diets of many. In 2020, almost three billion people couldn’t afford a healthy diet, up by 112 million compared to 2019 because of Covid-19. Living and food costs make it even more challenging for people to access a healthy diet.
The report also refers to the energy crisis, with countries worldwide affected by high and volatile prices of fossil fuels. The UN asked the international community to find a way to manage the crisis in a way that safeguards meeting climate targets of not exceeding 1.5C degrees above pre-industrial levels. There’s a distinct irony that oil companies, which got us in the climate mess in the first place, are now making record profits from a major war. Perhaps there’s a lesson to be learned here.