Oil, gas turn up the heat
Energy firms can afford to slow climate destruction
The oil and gas industry is making record profits thanks to high energy prices, but it also is pumping out more greenhouse gases than ever before.
If Exxonmobil, Chevron and other oil companies have tens of billions to buy back stock and reward investors, they have a billion to spend on controlling emissions. No longer can they claim that tighter regulations will bankrupt them.
Houston-based Exxon reported a record $17.9 billion profit for the quarter ended June 30th, more than triple the $4.7 billion it made last year in the same period. Chevron reported a record $11.6 billion in profit in the second quarter and a nearly 83 percent rise in revenues.
San Antonio-based Valero Energy said margins on refining surged to an unprecedented $30 per barrel, roughly four times year-ago levels. Houston-based refining giant Phillips 66 reported net income of $3.2 billion and a 77 percent increase in revenues.
The top 28 publicly traded independent oil producers generated $25.5 billion in free cash flow in the second quarter, Bloomberg news reported.
The energy crisis induced by Russian President Vladimir Putin’s war on Ukraine has been very, very good for oil and gas.
Profits are high because fossil fuel corporations do not pay for the damage their products cause the planet. They don’t pay carbon dioxide or methane taxes, and the U.S. is not effectively limiting emissions. Our grandchildren will pay for the warmer climate instead.
Natural gas producers could reduce emissions by 82 percent, if they chose, the consulting firm Accenture determined in a new report.
But despite their promises, the oil and gas industry is increasing them, especially in Texas.
Carbon Mapper, a partnership between NASA’S Jet Propulsion Laboratory and university researchers, identified 533 methane “super emitters” during a 2021 aerial survey of the Permian Basin. The Associated Press sent journalists with special equipment to investigate.
Just 10 companies owned at least 164 of the sites, according to an AP analysis of Carbon Mapper’s data. They included drilling sites, natural gas compressors, pipelines and other assets typical to the oil patch. Every leak was easily detectable using standard equipment.
If they chose to check, the owners of the 533 sites would know they were super emitters. But why would they? Releasing greenhouse gases is cheaper than finding leaks, and no regulator expects them to stop.
Texas Railroad Commission Chairman Wayne Christian, whose job is to oversee the industry, keeps claiming that regulating emissions will destroy the oil and gas business. Using talking points from the industry’s main lobbying group, the American Petroleum Institute, he brags on how companies have voluntarily reduced emissions.
“The Biden administration continues their efforts to tax and regulate the oil and gas industry out of existence,” Christian said. “The U.S. is a global leader in reducing emissions, not through regulation — but technological innovation.”
True, some companies have patched some leaks, but the decrease in emissions came mostly from a decrease in drilling after prices dropped in 2014. The number of active rigs, though, is growing again with energy prices.
Kayrros, a European energy data analytics firm, uses satellites to collect emissions data in the Permian. Methane emissions jumped by one-third in the first quarter of 2022 compared to the fourth quarter of 2021 and by nearly 50 percent year over year, surpassing PRE-COVID levels.
“The increase gained momentum in (the first quarter of 2022) and looks at risk of accelerating further as drilling and fracking activity respond to high oil and gas prices and calls for more production,” Kayrros researchers wrote.
In conference calls last week, Exxonmobil executives promised a 25 percent year-on-year increase in Permian drilling while Chevron plans to add 15 percent more. Smaller companies have already stepped up production.
Mineral rights holders and environmentalists have complained for decades about leaking methane, which is the valuable part of natural gas. Rights owners say they are cheated out of income, and environmentalists know methane is 83 times more damaging to the climate over 20 years than carbon dioxide.
An affordable, marketbased solution is a $50 million-a-year tax on methane emissions, which would induce companies to patch leaks and avoid $1.8 billion in climate damages a year, according to a University of Chicago study.
Texas Republicans in Congress, though, have blocked proposed taxes on emissions, and Christian has blocked state regulations. Today’s short-sighted partisanship means more hot summers and drastic action in the future.
Controlling emissions is about fairness, not politics. When a product damages our shared environment, the company making the profits should pay to mitigate the damage. We need elected representatives who will enforce this common-sense principle and protect our future.