{"id":1420,"date":"2022-09-08T18:33:53","date_gmt":"2022-09-08T18:33:53","guid":{"rendered":"http:\/\/roydadnaft.ir\/English\/?p=1420"},"modified":"2022-09-08T18:33:55","modified_gmt":"2022-09-08T18:33:55","slug":"big-oil-and-opec-are-holding-the-world-to-ransom-its-time-to-rein-them-in","status":"publish","type":"post","link":"https:\/\/roydadnaft.ir\/English\/1420\/","title":{"rendered":"Big oil and Opec are holding the world to ransom \u2013 it\u2019s time to rein them in"},"content":{"rendered":"
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As Winston Churchill reportedly said in the 1940s as he was working to co-form what would become the United Nations: \u201cNever let a good crisis go to waste.\u201d It is advice the giant oil and energy corporations and\u00a0Opec, enabled by politicians, have taken to heart. This is reflected in the price of petrol and our ballooning heating bills.<\/p>\n\n\n\n

A new\u00a0study\u00a0calculated that the oil and gas industry has made more than $2.8bn (\u00a32.4bn) a day in profits over the past half-century. In the second quarter of 2022, Exxon posted a profit of $17.9bn, the highest any publicly listed oil company has ever reported. Chevron hauled in $11.6bn, while Shell reported $11.47bn and BP $9.3 bn, its biggest windfall in more than 14 years.<\/p>\n\n\n\n

National oil companies such as Saudi Aramco saw year-on-year profits rise 90% during the second quarter. The Saudi kingdom raked in a cool $88bn during the first half of 2022. Norwegian\u2019s Equinor paid $3bn in dividends last month, while France\u2019s Total tripled its income. Glencore, the world\u2019s largest coal shipper, made record profits and will pay shareholders an additional $4.5bn.<\/p>\n\n\n\n

While shareholders and executives reap the benefits of this crisis, families struggle with exorbitant fuel and energy bills on top of climbing food prices. The UN reports that\u00a050 million people in 45 countries\u00a0are facing famine.<\/p>\n\n\n\n

The UN secretary general, Ant\u00f3nio Guterres, condemned the fossil fuel super-profits as \u201cgrotesque greed\u201d and urged governments to tax firms\u2019 huge windfalls, while reiterating that it was immoral for corporations to be making record profits at a massive cost to the poorest communities and the climate.<\/p>\n\n\n\n

\u201cThe combined profits of the largest energy companies in the first quarter of this year runs close to $100bn,\u201d he said. \u201cI urge all governments to tax this excessive profit and use the funds to support the most vulnerable people through these difficult times.\u201d<\/p>\n\n\n\n

\"An
A frozen oil valve control wheel in Bashkortostan, Russia, as winter looms. Photograph: Bloomberg\/Getty<\/figcaption><\/figure>\n\n\n\n

This \u201cenergy crisis\u201d has less to do with economic forces and more with greed.\u00a0Petrol prices\u00a0are lowest in Venezuela ($0.022 a litre), while a few miles away, Trinidad and Tobago pays $0.994. In Saudi Arabia, it\u2019s $0.62, Russia $0.837, the US $1.083, China $1.285, the UK $2.003 and Norway $2.218. The price at the pump is made up of the costs of crude oil, refining, shipping and distribution, marketing, wholesale and retail margins, and, of course, taxes. The main driver is the crude price, which fluctuates at 50% to 60% of the total. Hence, an increase in crude raises petrol prices.<\/p>\n\n\n\n

Another driver is inflation. Quantitative easing, or \u201cprinting money\u201d, through the pandemic equated to\u00a0\u00a3895bn\u00a0pumped into the UK economy alone. This has contributed to Britain\u2019s inflation\u00a0rate, which is 10.1% and heading towards 15% \u2013 not vice versa, as some may have us believe. Stagflation is now a real possibility worldwide. All of this against the backdrop of many countries\u2019 astonishing debts.<\/p>\n\n\n\n

This brings us to Ukraine. For decades, even the rumour of war has been enough to send oil prices rocketing. Most thought the west\u2019s sanctions on Russia, in response to Vladimir Putin\u2019s invasion, would create a massive economic hit.<\/p>\n\n\n\n

Enter\u00a0Opec+, the cartel of the 13-member Organization of the Petroleum Exporting Countries and an informal group of non-Opec members led by Russia.\u00a0Opec\u00a0now includes its five founders \u2013 Iran, Iraq, Kuwait, Saudi Arabia and Venezuela \u2013 as well as Libya, the UAE, Algeria, Nigeria, Gabon, Angola, Equatorial Guinea and the Congo.\u00a0Opec+\u00a0members include Russia, Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Sudan and South Sudan. Opec+ accounts for about 50% of all crude oil but more than 90% of proven reserves.<\/p>\n\n\n\n

As the world locked down in early 2020, demand for crude plummeted. Production was reduced, hoping for a resurgence in price, and then, as 2021 ended, demand increased. Russia invaded Ukraine and crude prices rocketed. The Opec+ gang met on 30 June and agreed to add 648,000 barrels a day to oil markets in July and August, while President Joe Biden hastened to court Saudi\u2019s crown prince, Mohammed bin Salman, a man he had harshly criticised for his human rights abuses. Both\u00a0Biden and Boris Johnson \u2013 failed, however, to get an increase in the oil supply\u00a0that would bring down the oil price from either Saudi or UAE. Opec+ kindly agreed to increase output by a mere 100,000 barrels a day for the month of September but in the last few days have agreed to slash that back again by the same amount for October.<\/p>\n\n\n\n

This cartel wields incredible power over an oil-addicted world. Some might argue that investment was stymied during the pandemic and now some countries cannot catch up. In reality, it is both Russia\u2019s influence and unabated corporate craving to recover 2020\u2019s lost profits, while creating the perception that they are endeavouring to increase production. In reality, they are choking supplies. Gazprom\u2019s closing of the Nord Stream 1 gas pipeline for \u201crepairs\u201d equates to Russia\u2019s warfare against the west. Gazprom has posted $41bn in profits in the past six months while operating at just over 40% capacity.<\/p>\n\n\n\n

So the world is again at the mercy of big corporations. Having been pillaged by big pharma during Covid, we now have to grit our teeth and bear the onslaught of big oil, the \u201cnew seven sisters\u201d \u2013 Saudi Aramco, Gazprom, China\u2019s CNPC, the National Iranian\u00a0Oil\u00a0Company, Venezuela\u2019s PDVSA, Brazil\u2019s Petrobras and Malaysia\u2019s Petronas \u2013 as well as Exxon, Chevron, Shell, BP, Total and others.<\/p>\n\n\n\n

However, any human-made crisis is solvable. There are tools available to our politicians to end this pseudo-crisis, including capping energy costs and imposing retrospective windfall taxes. Reforming the energy market must be on the horizon.<\/p>\n

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