Last week, Saudi Arabia’s state-owned oil company, Saudi Aramco reported record-breaking profits of $48.2 billion USD for the second quarter of 2022, representing a 90% year-on-year increase in net income. What this increase in profits represents is not good for the environment. this is a representation of this world’s over-reliance on fossil fuels which is only getting worse.
This increase in profits is a result of heightened demand post-COVID, but also due to the current war in Europe, and the demand will only increase as China is expected to open back up to full economic productivity in the next few months.
However, Saudi Aramco is not alone in reporting windfall profits. Other massive oil-producing corporations such as ExxonMobil, Chevron and BP, have also reported huge earnings with US President Biden stating that Exxon was making “more money than god.”
Over-Dependence on Oil
What is scary about Aramco and other oil-producing companies’ profits is that it represents the world’s overdependency on fossil fuels especially as the Russian-Ukrainian war persists.
As much as governments across the world want to present a green agenda, there is also the issue that they have continued to invest in the fossil fuel industry as seen with the Biden administration allowing for more offshore drilling in Alaska, as well as diplomatic visits to Saudi Arabia to pressure OPEC into pumping more oil.
Furthermore, the CEO of Saudi Aramco, Admin Nasser, is only fuelling the debate by stating that there needs to be more investment in the oil industry, especially after so many years of industry-depleting investments. This is a smart move from Aramco especially as the Saudi state is looking to diversify their investments and revenue streams as their oil fields will eventually run dry. For Aramco to diversify into other industries they need the capital to invest, which will only come from oil money.
However, this situation presents a wake-up call for governments around the world to start taking investments in the renewable energy sector more seriously. We have already seen in the United States with the new IRA bill that investments in renewables are becoming more popular, however, without the proper infrastructure in place to support the transition from oil to electricity, there is no way we can look at a sustainable future.
Consequences for the Environment
Not only are there mass consequences of our overreliance on oil economic but also environmental. Oil production and consumption is one of the leading polluters and has a massive effect on climate change. Summer 2022 has been one of the record books in terms of extreme weather events.
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Not only have we seen massive heat waves but also now mass flooding which can all be attributed to climate change. Burning fossil fuels is only making the hole in the ozone layer bigger, as well as taking us closer to the point of causing irreparable damage.
For Reference, it was estimated in 2018, that the world only had a 50% chance of meeting the Paris Agreement’s goal of keeping global warming down to a minimum of 1.5°C. In order to continue on track to meet that goal, the IPCC has stated that we need to shrink the global carbon budget by 30%.
However, Saudi Aramco and its production are responsible for 4.7% of the total carbon budget. This is significant because Aramco is already producing at its maximum capacity, and governments across the world are asking them to pump more. This sets a very dangerous precedent moving forward and puts us completely off the path of meeting our enviornmenal goals.
Check out this link to learn more about the greenwashing image behind Saudi Aramco: https://www.clientearth.org/projects/the-greenwashing-files/aramco/