I know many people have been happy about the low prices at the pump lately, but the low prices are not good for American oil companies. As a matter of fact, Exxon Mobil, the most profitable corporation in the history of corporations, is currently losing $61 million per day. Other oil companies such as Shell, Chevron and BP are also suffering in this Covid-19 economy. Quarantine has sapped demand for gasoline, diesel and jet fuel as people stayed home. So, the richest and most destructive industry on the planet has been diminished.
In addition to the lower demand for petroleum, there has also been an effort to undercut American shale oil by the Russians and Saudi Arabia. Russia and OPEC were coordinating production levels under an agreement known as OPEC+. It was formed, ostensibly, to counter the American shale oil boom, which had turned the U.S. into the world’s largest producer. But for shale oil to be economically viable, prices need to be high. Demand will continue to decrease as low-cost renewables keep pushing the energy transition. There is no return to normal for the shale and oil sands producers. Saudi Arabia and Russia will retain the power to drive North American producers out of business whenever it suits them. From now on, the fate of the oil industry is tied to the whims of two egomaniacal autocrats. There is no scenario where fossil fuels make a full and sustained recovery from this crisis.
Growing concerns about climate change, tighter regulations, and the rise of electric cars and trucks will force a reckoning for an industry that has dominated the global economy over much of the last century. General Motors further raised the stakes for the industry last week when it said it aimed to do away with internal combustion engines and sell only electric cars by 2035. The oil industry is slowly transitioning to a future dominated by cleaner and renewable resources.
The oil and gas industry has been a major influence in global economies. The influence of the petrochemical industry with their incredible financial resources, has been impacting our democracy for decades. These companies and their lobbyists have been actually writing legislation that regulates (more accurately deregulates) their industry and provides huge subsides for these huge corporations. For example, the 1,801 largest publicly traded oil, gas and coal companies worldwide earned net profits worth $500 billion in 2013 yet received direct subsidies worth $700 billion. This is a moderate estimate. These subsidies are hidden in the tax codes. In addition, the industry has put the brakes on any reforms to address climate change. The money influence of the petrochemical industry on politicians is why there has been no political will to pass legislation to address climate change. BP, Shell, ExxonMobil, Chevron and Total spend a combined $200 million per year on lobbying “designed to control, delay, or block binding climate-motivated policy,” says a report by InfluenceMap, a nonprofit research group. These five companies also spend $195 million annually on branding campaigns meant to portray them as energy transition champions—even as they drastically increase spending on fossil fuel extraction. Fossil fuel subsidies are a form of corruption that enriches fossil fuel shareholders at the expense of Earth’s 7.5 billion people.
Now that the industry is vulnerable, it is time to take advantage of it and the Biden administration and Democratic led legislative branch are doing just that. Every day that we don’t take political initiative, we increase the likelihood that people will suffer from wildfires, flooding, drought, starvation, displacement, disease, and war due to climate change. Let’s stop funding our own destruction. Let’s create a future economy with good jobs, a habitable earth and reprieve from the whims of erratic dictators. There is no path back to normal. And we can do much better than normal if we refuse to waste this crisis. Instead, let’s invest our hard-earned tax dollars in clean technologies for a prosperous future and break free from the moneyed interests that keep us from moving into a sustainable economy, a sustainable future.