Why oil companies thriving despite global efforts to combat climate change?

The article from Splinter provides a comprehensive examination of the persistent success and dominance of the oil industry despite widespread acknowledgement of climate change as an existential threat.

Highlighting record-breaking profits and continuous project expansions, the piece underscores a paradox: oil companies thrive even as the global consensus calls for reducing fossil fuel consumption. Recent examples include ConocoPhillips, Shell, BP, and ExxonMobil, all surpassing earnings expectations in the second quarter, reflecting an industry in robust health.

The core question posed by the article is why oil companies continue to flourish in a world where the need to transition to renewable energy is widely recognized. The short answer is money. Fossil fuels still constitute about 80% of global energy use, and the high value of these products sustains the industry's profitability.

Furthermore, the companies leverage significant financial resources to maintain their market position, often receiving deference from governments even in countries committed to net-zero goals. This disparity is highlighted by instances such as oil market expert Dan Dicker’s remarks on MSNBC, where protecting oil companies' profitability was mentioned as a priority alongside breaking OPEC’s control.

The article, crediting Splinter for its analysis, argues that if governments truly accepted the urgency of the climate crisis, they would take more drastic measures against the oil industry. These measures could include nationalizing the industry with the explicit aim of phasing it out, setting clear timelines for reducing oil extraction and use. Such actions, though unlikely, represent a rational approach to addressing climate change. However, nationalized oil industries, where they exist, typically focus on revenue generation and expansion, not curtailment.

There are glimmers of progress in the global climate effort. The rapid growth of solar power and battery storage, legislative measures limiting fossil fuel use, and ongoing legal battles against major oil companies indicate a positive shift. However, the article notes that oil companies possess formidable tools to counteract these efforts, such as international legal loopholes allowing them to sue governments over fossil fuel restrictions, which they often win.

The article concludes by pointing out a significant cognitive dissonance: the global acknowledgement of climate change as the paramount threat of our time contrasts starkly with the insufficient actions taken against the oil industry. The window for impactful climate action remains largely outside the current political and economic framework, illustrating a critical gap between recognition and action in addressing climate change.