Aramco’s Record-Breaking Profit: A Reminder of the Power of the Fossil Fuel Industry
On Sunday, Saudi Arabian oil giant Aramco announced that it had recorded a net profit of $161.1 billion for 2022, a 46 percent increase from the previous year. This historic profit is almost triple that of Exxon's $56 billion and more than that of Google, Amazon, Tesla and Microsoft combined for the same time period. The rise in profits was credited to higher energy costs, a rise in the amount of products sold, and better margins for processed items.
Aramco CEO Amin Nasser said on an earnings call that “this is probably the highest net income ever recorded in the corporate world.” He added, “We are cautiously optimistic that markets will remain tightly balanced” if China opens up, jet fuel demand increases, and spare capacity remains low.
The company’s profits for last year are almost triple that of Exxon’s $56 billion and more than four times that of Shell ($39.9 billion), Chevron ($36.5 billion) and BP ($27.7 billion), most of which are also performing at record levels.
In March of last year, global crude flows were disrupted by Russia's invasion of Ukraine, causing oil prices to skyrocket; Brent crude rose to an eight-year high of $139.13 per barrel. In the second half of 2022, prices decreased quickly due to the raising of interest rates by central banks and fears of economic downturn.
The surge in profits has fuelled overall economic growth in Saudi Arabia, the world's biggest crude exporter, which officials put at 8.7% in 2022, the highest rate in the G20. Capital expenditure rose by 18 percent to $37.6 billion last year, and is expected to increase to between $45 billion and $55 billion in the coming years, the company said.
However, the news has not been met with universal praise. Amnesty International said Aramco’s profits should be used to fund a “just and human rights-based transition to renewable energy” and further improve the lives of ordinary Saudi Arabians.
Aramco's profits are a reminder of the power of the fossil fuel industry, and the risks of ignoring the climate crisis. It is past time that Saudi Arabia acted in humanity's interest and supported the phasing out of the fossil fuel industry, which is essential for preventing further climate harm. The profits gained by Aramco should be employed for the betterment of the environment and humanity.
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