Oil profits soar, but the way forward for the industry remains uncertain

The war in Ukraine has been good for the oil companies. Look no further than Shell’s first quarter results. It made record profits in ...


The war in Ukraine has been good for the oil companies.

Look no further than Shell’s first quarter results. It made record profits in the first three months of the year: $9.1 billion, nearly three times what it made in the first quarter of 2021.

Shell, the world’s largest private oil trader, has benefited from high global energy prices and market volatility, my colleague Stanley Reed explained. The company’s managing director, Ben van Beurden, took note of the Russian invasion of Ukraine. He said it had shown “that secure, reliable and affordable energy simply cannot be taken for granted”.

The rest of us pay for these benefits in at least two ways. Gas prices are up, which means the price of everything that depends on gas to get from point A to point B is up, including food. I feel the pinch at the grocery store.

To state the obvious, the global economy relies on fossil fuels. Still.

We also pay for the damage caused by the burning of oil and gas, in the form of greenhouse gases in the atmosphere that warm the planet and exacerbate extreme weather events. Take into account heat wave in India and Pakistan and the drought in parts of Chile and California. You know that. You have read this newsletter.

Shell is not the only oil company to achieve a very good first quarter. Exxon Mobil doubled its profits from the year-ago period, bringing in $5.48 billion last week. Chevron increased its profits to $6.3 billion. BP’s first-quarter profit of $6.2 billion was the highest in more than a decade. (In a statement, Exxon noted that it does not have the power to set oil and gasoline prices.)

So what do these optimistic benefits mean for our future on a climate-changing planet?

1. History moves in an irregular line.

At this time last year, Big Oil was under unusual pressure. A court at the Netherlands, where Shell was based, told Shell to drastically reduce greenhouse gas emissions from all of its global operations by 2030 – in effect, to change its core business – for climate reasons. (Shell mentioned he would fight the decision. He has since moved its headquarters from the Netherlands to Great Britain.)

There was also pressure from shareholders. Exxon Mobil faced an insurgency by a small group of activist shareholders pushing the company to move away from fossil fuels more quickly.

Also last May, the International Energy Agency said no new oil and gas projects should be built if the world is to neutralize carbon emissions by mid-century and slow climate change.

2. Big Oil’s future is still uncertain.

Two things can be true at the same time. This is how the world works.

It is true that the profits of the oil companies are exploding. It is also true that the energy transition away from fossil fuels is well underway.

Oil companies are not rushing to drill more oil. Not quite yet. They are cautious, like my colleague Clifford Krauss wrote recently. They fear that prices will not stay high long enough to justify opening new wells. Many investors choose to put their money in clean energy instead. Exxon does not plan to change its drilling strategy, as Cliff explained, based on what he called “strong near-term demand.”

Chevron also doesn’t expect these high oil prices to last forever. “There is a lot of uncertainty,” said its chief executive, Michael Wirth.

3. There is always increasing pressure on Big Oil.

Shareholders are increasingly concerned about climate change. Asset managers, including BlackRock, the world’s largest, have set their own climate targets. United States Security and Exchange Commission is set to release new rules requiring companies to publish more data on their climate plans.

Over the past two weeks, amid news about oil company profits, there have been renewed calls for additional levies. “Anyone wondering why the US and Europe don’t tax windfall profits?” Robert Reich, former US Secretary of Labor, wrote on Twitter.

4. Keep an eye out for what these companies do next.

A big question for me is whether the oil companies will inject their profits into the energy transition.

Oil companies are diversifying their portfolios to add renewable energy sources, such as wind farms, and investing in carbon capture technologies. But overall, they are not moving from their core business: the extraction of fossil fuels.

In a statement to my colleague Manuela Andreoni, Shell said it was transforming its business to reduce emissions from its oil operations. Exxon said its future investments “will keep pace with the energy transition.”

Shell spent $2.4 billion, or 13% of its investments, on the energy transition last year. In the first quarter of 2022, the company spent $985 million on energy transition. That’s barely a tenth of its first-quarter earnings.

Shell’s climate goals include reducing the carbon intensity of its operations, meaning it could continue to increase oil production, but with lower emissions per barrel.


Not in my garden: The United States will need new infrastructure to meet its climate goals. But a dispute over hydropower at the Canadian border shows it won’t be easy to build it.

The “new computer”: Tech venture capitalist John Doerr donates $1.1 billion to fund new climate school at Stanford University.

Visible from space: Images captured by a National Oceanic and Atmospheric Administration satellite show the destructive power of forest fires and dust storm.

Uncharismatic carbon sinks: The Times publishes a special series on peat bogs. Start with this article, about the efforts of a Scottish billionaire to save them.

Floating life: Plastic waste has created large islands of trash in the ocean. New research shows they are now full of sea creatures.


  • Many countries have stopped accepting US waste exports. Now the recycling rate is down, Reuters reported.

  • India’s brutal heat wave has a new victim: mangoes. Much of the country’s production is exported, Gaon Connection explained, so low yields can affect several countries.

  • The Biden administration has unveiled a plan to address the effects of pollution and other environmental issues on sensitive communities, according to E&E News.

  • The AP tells the story of an isolated indigenous community in the Amazon who are using social media to pressure authorities to stop the destruction of their land.

  • A bat with a nine-inch wingspan flew from Russia to the French Alps, a record that baffled researchers, National Geographic reported.


Times national correspondent Simon Romero never expected to cover the raging wildfires in northern New Mexico, where he grew up. But a mega-fire has ravaged more than 165,000 acres in the region this year, threatening an age-old crop. Firefighting is getting more difficult and demanding strategies that worked once. Many of those fleeing are descendants of Hispanic settlers from New Mexico, who arrived long before the United States existed as a country. Their communities survived economic crises and conquering armies that burned down villages during the Mexican-American War. They hope to win this disaster too.


Thanks for reading. We will be back on Tuesday.

Manuela Andreoni, Claire O’Neill and Jesse Pesta contributed to Climate Forward.

contact us at climateforward@nytimes.com. We read every message and respond to a lot!



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Newsrust - US Top News: Oil profits soar, but the way forward for the industry remains uncertain
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