Perhaps it is almost philosophical to ask oneself what profits God is making up there on his cloud. That could be particularly big wins, after all, many churches are just glittering with gold. But maybe they are rather modest yields, but very ethical ones. The incumbent US President Joe Biden seemed to have opted for the former reading when he spoke of the fact that some oil companies in his country made “more money than God”. A surprising metaphor, especially since Biden is a devout Catholic.
Apart from that, the 79-year-old had his pithy words on big oil companies like Exxon Mobil. Their profits have increased so much in the last three months alone that even long-established stockbrokers are speechless. Since the oil giant BP also presented its figures on Tuesday, it is clear that the five oil multinationals Shell, Exxon, Total, Chevron and BP made a profit of more than 60 billion dollars in the second quarter. The so-called “supermajors” now want to make their shareholders happy with billions. But motorists, critical investors and environmentalists are asking themselves: What’s supposed to be great about that?
The oil multinationals earn twice as much
Perhaps this question is best answered in the Frankfurt Stock Exchange, where capital market strategist Robert Halver is standing in one of the large, white circles in front of a fixture with six screens. While the major stock market indices have been diving in recent months after the Ukraine war, the oil stocks have made astonishing gains: “These oil stocks are the special task force in a world where there is a gas crisis,” says Halver, typing around on his colorful financial keyboard. “Especially since they also pay pretty nice dividends.”
The stock market pours the result into rising share prices: the titles of the oil giant BP have risen by 20 percent since the beginning of the year, those of the competitor Chevron by almost 50 percent, and investors in Exxon Mobil were even able to post an increase of more than 65 percent. After all, the oil companies have made double profits in the past few months: as a result of the Ukraine war, oil prices on the world market have risen, which has brought billions into the coffers of the companies (see grafic).
Added to this were lavish profits from the refinery business, where crude oil is turned into gasoline or heating oil. In German refineries, the average margin has quintupled since the beginning of the year, according to the Energy Information Service. According to its own statements, the oil giant BP made a profit of around 46 dollars per oil barrel with its refineries in the past quarter, while a year earlier it was only around 14 dollars. “It’s like old age,” says stock market expert Robert Halver: “These stocks are experiencing their second spring.”
Billions of dollars – for the shareholders
However, if you drive a little further out of the city from the Frankfurt financial center, you can quickly get a completely different perspective. The sun is beating down on the black concrete in front of the Shell petrol station on Friedberger Landstrasse, while there is a pungent smell of petrol. The red letters on the price column show from afar that a liter of Super E10 currently costs 1.759 euros here. “It’s lucky that I take the train so much that I hardly ever need the car anymore,” says a man in a red shirt. “I’m mad at the oil companies,” complains another, “they’re filling their pockets.”
At least that’s not the whole truth, because while the oil companies are making billions in profits, they’re distributing a good chunk of that money to their shareholders. BP alone has raised its dividend to six cents per share and intends to pay out ten percent more to investors than in the previous quarter. In addition, the company plans to spend $3.5 billion in the third quarter alone to buy back its own shares in the market. Because the demand for the title then increases, the price usually climbs as well.
Taken together, the five global oil giants have already invested around $20 billion in the first half of the year to buy back their own shares. Chevron recently increased its upper limit for buybacks this year by five billion euros. Exxon plans to buy back its own stock for around $30 billion this year and next. And Shell, in turn, has announced purchases of around six billion dollars for the next three months.
Cash in the excess profits?
What pleases bankers on the Frankfurt trading floor is what critics call profits from the crisis, even war profits. Or “windfall profits” in English. Although they don’t always have much to do with wind in the narrower sense, but more with oil. In the UK, the government passed a special profits tax back in June that will make oil and gas companies pay. In France, on the other hand, President Emmanuel Macron was less sympathetic to a tax, but urged the oil companies to offer “voluntary” discounts at gas stations. In Germany, too, politicians such as SPD leader Lars Klingbeil and Green Party leader Ricarda Lang had brought an excess profit tax into play.
Whereby many experts are critical of such a tax: because at what number should officials base the excess profits? Thus, profits in the current year can be roughly compared with the profits of the previous year. However, if a corona lockdown restaurant ruined business there, they do not necessarily make excess profits a year later with better business. Even compared to an average value for the five or ten previous years, companies like Biontech’s vaccine makers would also be asked to pay.
Even two studies of German economic research institutes certified that the oil multinationals “essentially” passed on the German tank discount. While prices in France continued to climb after June 1, average prices per liter of Super E10 in Germany fell sharply, so the discount may have been passed through to customers. “In the case of super petrol, it was 29 to 30 cents from the 35 cent tax cut,” says expert Florian Neumeier from the Munich ifo Institute.
But not all statistics are good for the oil multinationals. Figures from the oil giant Exxon show that it intends to invest only around 12 percent of its investments in green technologies and CO2 storage in the coming years. “So only a small part really goes into renewables,” says Greenpeace finance expert Mauricio Vargas. “The fact that it takes the big oil multinationals to finance renewable energies is simply not true.”
In London, the oil multinationals now want to score points with better news, above all with better pictures. Shell recently inaugurated a futuristic filling station there: under warm, orange-colored wooden arches, electric cars charge their batteries at charging stations, and the electric cars can be fully refueled in just 15 minutes. gas pumps? If you look in vain in the London gas station future.