By Ben Eguzozie
- Profit rally could continue as renewables yet to gain traction
The world’s biggest five oil firms, ExxonMobil, Shell, Chevron, TotalEnergies and BP — loosely known as the Big Five — earned an all-time-high combined profits of $200 billion in 2022, according to compiled data of their performances for last year by Trading Platforms.
Analysts say despite the global economic crisis in 2022, the oil companies managed to pull through unscathed, earning more profits.
The big oil companies are also projected to keep this earning going for some time to come, gaining more profits as renewables are yet to secure standing in the global market.
ExxonMobil, the Texas, USA-based oil company, earned $59.1 billion in profits, which represents a significant rise from its $23.04 billion in 2021. At home in the US, the global oil giant has come under severe criticisms due to the rise in its profits. The White House described the profit as “outrageous”.
Chevron, another US global oil giant, reaped $36.5 billion in profits up from the $15.6 billion it posted in 2021.
TotalEnergies, French global oil company, which changed name from Total a few years back, harvested $36.2 billion which is 100 percent up from the $18.2 billion it garnered in 2021.
BP, Britain’s oil company was able to secure $27.7 billion in 2022 up from $12.8 billion it received the previous year (2021).
According to Edith Muthoni, analyst at TradingPlatforms, the profits posted by the global oil giants in 2022 signposts it as their most profitable year.
Reasons for Big Five’s massive profits rally
The onset of the Covid-19 pandemic caused the oil companies’ sales to plummet. However, with the restrictions lifted, oil demands increased, leading to a surge in global oil prices. This propagated the oil companies’ revenue, leading to a significant profit rise.
Equally, the Russian invasion of Ukraine also led to the depletion of energy supplies worldwide. Hence the world saw oil prices skyrocket causing the global giant oil firms to reap huge gains.
In developing countries, oil demand increased significantly. Growing population and improving economic situation in these economies led to many developing countries importing more oil, providing significant revenue for the oil firms.
Future challenges facing the Big Five
The significant rise in profits of the global oil companies has seen world leaders imposing windfall taxes on the big oil firms. For example, ExxonMobil recently filed a lawsuit against these windfall levies imposed by the EU, saying it incurred $1.3 billion.
The talk on climate change further threatens the oil industry as most countries are planning to cut down on fossil fuels use in support of reducing global warming effects.
The significant gains of oil companies in 2022 are impressive; however, oil companies will have to think of strategies to remain competitive as renewables are attracting the attention of many countries.
Nevertheless, the Big Five may just continue to reap big profits as renewable energy industries development are yet to gain more traction, especially in developing countries.
