London Daily

Focus on the big picture.
Saturday, Feb 22, 2025

Oil firms seem more interested in shareholders than net zero

Oil firms seem more interested in shareholders than net zero

Analysis: Is the energy industry willing to invest in renewables rather than dividends and buybacks?

Oil companies are partying like it’s 2008. As during the global financial crisis that took hold that year, economies face the prospect of deep recessions but oil companies are reaping record profits. BP on Tuesday became the latest in the procession to post bumper results, with its best quarter since record earnings in 2008, just as the financial system collapsed.

This time around, the finances of the oil and gas giants have benefited from the higher prices resulting from Russia’s invasion of Ukraine, just as consumers in the UK and elsewhere face sky high energy bills and a broader cost of living crisis.

There were calls for windfall taxes back in 2008, as now, but some things have changed. The climate emergency has risen up the agenda, and been signed into law. That has forced oil companies into investments in renewable energy and other net zero-compatible projects that would have been laughed out of a supermajor’s boardroom in previous decades. Even the US giants ExxonMobil and Chevron – laggards in an industry of laggards – have been forced to admit begrudgingly that some form low-carbon technologies are going to be necessary.

BP chief executive Bernard Looney knows how to talk the talk. Speaking to analysts on Tuesday he repeatedly highlighted BP’s lower-carbon investments. On their own they can make for impressive reading – BP is a leader in UK electric car charging, for instance – but a quick look at oil company investments makes for less flattering reading.


Alok Sharma, a member of the UK cabinet (albeit a lame-duck one), on Tuesday highlighted a comparison between BP’s share buybacks, worth $3.5bn (£2.9bn) this quarter alone, and its planned spending on low-carbon energy for the whole year of $2.5bn. We should be able to “see if their actions match their rhetoric”, he wrote.

BP, its FTSE 100 rival Shell, the US companies ExxonMobil and Chevron, and France’s Total between them made underlying profits of nearly $100bn in the first half of 2022 – triple their earnings in the same period in 2021. The same companies have so far announced shareholder returns (via dividends and share buybacks) for this year worth $52bn – more than half their profits for the first half.

Returning money to shareholders can have upsides for the broader population, as savers and pension funds will be large beneficiaries. But share ownership is dominated by the wealthiest, and a stream of dividends will do very little indeed to help poorer households in the UK or elsewhere cope with soaring energy prices.

Energy prices will remain high up the political agenda around the world. The issue is likely to be at the top of the in-tray for the UK’s new prime minister once the Conservative party chooses between Liz Truss and Rishi Sunak. The average energy bill in Great Britain could reach more than £3,600 a year this winter, according to the latest estimates.

Shell’s boss, Ben van Beurden, last week said he “cannot perform miracles” to bring on new energy supply and lower bills for households. But the history of renewable energy technology – such as the astonishing increase in wind and solar power as costs fell – suggests that miracles are not necessary: what is required is the will to invest in a speedier transition.

Finance bosses are taught that they should return cash to shareholders when they are unable to make more money themselves with new investments. The pace of buybacks and dividends during 2022 suggests that oil companies are content to hand more cash to investors rather than invest more to speed up the net zero transition.

Newsletter

Related Articles

0:00
0:00
Close
Good News: Senate Confirms Kash Patel as FBI Director
Officials from the U.S. and Hungary Engage in Talks on Economic Collaboration and Sanctions Strategy
James Bond Franchise Transitions to Amazon MGM Studios
Technology Giants Ramp Up Lobbying Initiatives Against Strict EU Regulations
Alibaba Exceeds Quarterly Projections Fueled by Growth in Cloud and AI
Tequila Sector Faces Surplus Crisis as Agave Prices Dive Sharply
Residents of Flintshire Mobile Home Park Grapple with Maintenance Issues and Uncertain Future
Ronan Keating Criticizes Irish Justice System Following Fatal Crash Involving His Brother
Gordon Ramsay's Lucky Cat Restaurant Faces Unprecedented Theft
Israeli Family Mourns Loss of Peace Advocate Oded Lifschitz as Body Returned from Gaza
Former UK Defense Chief Calls for Enhanced European Support for Ukraine
Pope Francis Admitted to Hospital in Rome Amid Rising Succession Speculation
Senate Republican Leader Mitch McConnell, at the age of 83, Declares His Retirement.
Whistleblower Reveals Whitehall’s Focus on Kabul Animal Airlift Amid Crisis
Politicians Who Deliberately Lie Could Face Removal from Office in Wales
Scottish Labour Faces Challenges Ahead of 2026 Holyrood Elections
Leftwing Activists Less Likely to Work with Political Rivals, Study Finds
Boris Johnson to Host 'An Evening with Boris Johnson' at Edinburgh's Usher Hall
Planned Change in British Citizenship Rules Faces First Legal Challenge
Northumberland Postal Worker Sentenced for Sexual Assaults During Deliveries
British Journalist Missing in Brazil for 11 Days
Tesco Fixes Website Glitch That Disrupted Online Grocery Orders
Amnesty International Critiques UK's Predictive Policing Practices
Burglar Jailed After Falling into Home-Made Trap in Blyth
Sellafield Nuclear Site Exits Special Measures for Physical Security Amid Ongoing Cybersecurity Concerns
Avian Influenza Impact on Seals in Norfolk: Four Deaths Confirmed
First Arrest Under Scotland's Abortion Clinic Buffer Zone Law Amidst International Controversy
Meghan Markle Rebrands Lifestyle Venture as 'As Ever' Ahead of Netflix Series Launch
Inter-Island Ferry Services Between Guernsey and Jersey Set to Expand
Significant Proportion of Cancer Patients in England and Wales Not Receiving Recommended Treatments
Final Consultation Launched for Vyrnwy Frankton Power Line Project
Drug Misuse Deaths in Scotland Rise by 12% in 2023
Failed £100 Million Cocaine Smuggling Operation in the Scottish Highlands
Central Cee Equals MOBO Awards Record; Bashy and Ayra Starr Among Top Honorees
EastEnders: Four Decades of Challenging Social Norms
Jonathan Bailey Channels 'Succession' in Bold Richard II Performance
Northern Ireland's First Astronaut Engages in Rigorous Spacewalk Training
Former Postman Sentenced for Series of Sexual Offences in Northumberland
Record Surge in Anti-Muslim Hate Crimes Across the UK in 2024
Omagh Bombing Inquiry Concludes Commemorative Hearings with Survivor Testimonies
UK Government Introduces 'Ronan's Law' to Combat Online Knife Sales to Minors
Metal Detectorists Unearth 15th-Century Coin Hoard in Scottish Borders
Woman Charged in 1978 Death of Five-Year-Old Girl in South London
Expanding Sinkhole in Godstone, Surrey, Forces Evacuations and Road Closures
Bangor University Announces Plans to Cut 200 Jobs Amid £15 Million Savings Target
British Journalist Charlotte Peet Reported Missing in Brazil
UK Inflation Rises to 3% in January Amid Higher Food Prices and School Fees
Starmer Defends Zelensky Amidst Trump's 'Dictator' Allegation
Zelensky Calls on World Leaders to Back Peace Efforts in Light of Strains with Trump
UK Prime minister, Mr. Keir Starmer, has stated that any peace agreement aimed at ending the conflict in Ukraine "MUST" include a US security guarantee to deter Russian aggression
×