Big Oil Profits

Published by DonDavidson on

Do you believe climate change is real? The oil company executives do. According to an article in Time Magazine, [1] Ben van Beurden, the CEO of Shell Oil Company, admitted in a 2019 interview that his company had known about climate change for decades, saying, “Yeah, we knew. Everybody knew.” Mr. van Beurden went on to say that Shell has publicly acknowledged that the science of climate change is real, and blamed society and its leaders (rather than the oil companies) for the failure to adequately address it.

For decades, in order to protect their profits, oil companies disputed the science and lobbied against any laws to address the problem (much like tobacco companies for decades disputed the science that showed that tobacco products cause cancer). Those profits tanked during the pandemic when people stopped traveling, causing CEOs and investors alike to question the future of oil. Then travel restrictions ended and people started traveling again, causing oil prices to skyrocket. The war in Ukraine has only made the problem worse by reducing the supply of oil, especially for western nations that are boycotting Russian oil to one degree or another. As a result of high oil prices, oil companies are now reaping big profits again. In the first quarter of 2022, ExxonMobil made $5.5 billion, Chevron made $6 billion, and Shell made $9.1 billion. Those oil companies are using their big profits to buy back stock, which raises their stock’s price, [2] and pay dividends. [3]

Most people in this country are now concerned about more pressing concerns than climate change, such as inflation and the price of gasoline, according to a recent CBS News poll. As I said last week, if the current price of gasoline and other oil products has a silver lining, it’s that high prices should decrease consumptionjust not nearly enough. In 2021, the International Energy Agency estimated that we need to reduce our consumption of oil products by 75% by 2050 in order to limit global warming to 2°C (3.6°F) over preindustrial levels, which is the target set by the 2015 Paris Agreement.  

Frankly, right now it doesn’t look like we will reach that target—and that could make biblical prophecy look remarkably accurate, as I discuss in Chapter 11 of my book, Beyond Blind Faith, entitled “Apocalypse Soon.” You can read that chapter, in its entirety, for free here. For more information on the books I’ve written, please go here.


[1] This blog entry is based in part on the article “Why We Can’t Quit Oil,” by Justin Worland, Time Magazine May 23/30, 2022.

[2] When a company buys back shares of its own stock, its profits are divided between fewer outstanding shares, making each share of stock more valuable. For example, if a company made $2 million in profit and has two million outstanding shares, then each share of stock made $1.00. But if that same company has only one million outstanding shares, then each share of stock would make $2.00. A stock in a company that is making $2.00 per share is obviously more valuable than a stock in that same company that is only making $1.00 per share.

[3] According to Charles Schwab’s website, Chevron paid a dividend of $1.34 per share in the 4th quarter of 2021, and raised that dividend to $1.42 per share in the first quarter of 2022. ExxonMobil paid a dividend of $0.88 per share in the first quarter of 2022, while Shell’s first quarter dividend was $0.48 per share. ExxonMobil and Shell did not raise their first quarter dividend compared to the 4th quarter 2021 dividend.


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