Energy giants rake in billions in profits, and calls for higher taxes multiply around the world

If any company has profited from the war in Ukraine, it’s the world’s five largest energy companies, fueling calls for higher taxes. These companies include Exxon Mobil, Chevron, Shell, TotalEnergies and BP, all of which have seen their combined profits increase by nearly $200 billion.

The war in Ukraine, fueled by the large-scale invasion of Russia, has put a strain on global oil supplies, with both countries being major players. As a result, major oil companies had to step up operations to meet consumer demand, particularly in the United States, the United Kingdom and the European Union.

This increased production and commitment was provided at a very high cost that was passed on to the average consumer. The gains were encompassed and capped by Exxon Mobil, which reported a profit of $56 billion, the highest ever in the history of the Western oil ecosystem.

TotalEnergies reported a profit of $36.2 billion, representing 100% growth over the previous year. BP also posted its biggest profit jump in more than 114 years, with a $27.7 billion profit for fiscal 2022.

While tension in the energy industry has been a bane for consumers, it has notably been a gain for these oil majors, a situation that has drawn intense criticism from all quarters. In his State of the Union address, U.S. President Joe Biden blamed oil companies for excessive gains at the expense of average Americans.

He raised the possibility of clawing back some of the profits through taxation.

“You may have noticed that Big Oil just reported record profits,” U.S. President Joe Biden said in his State of the Union address Tuesday. “Last year, they made $200 billion in the middle of a global energy crisis. That’s outrageous.”

While the tax rate is set to quadruple, President Biden said these oil majors will still make plenty of profits.

Energy giants defend profits, fight calls for taxation

In addition to President Biden, the colossal earnings of these oil giants have also been criticized by other activists, including Amnesty International and Global Witness.

As calls for higher taxes mount, executives of these energy giants have defended their profits, saying they help maintain a stable investment environment.

“At the end of the day, taxes are an issue that governments need to address. Of course, we engage and provide perspective and the key perspective that we try to provide is a context around the fact that companies like us that need to invest many billions of dollars to support the energy transition need a secure and stable investment climate“, said Wael Sawan, CEO of Shell, in a recent statement.

Shell’s $40 billion in profits is the highest since $28.4 billion in 2008. With the threat of imposing a massive tax, the companies’ profits this year are still marked by uncertainty.