The current policy of sanctions against Russia as a result of its intervention in Ukraine since last February generated a rearrangement of the fundamental gears of the global economic system, as can be seen in the exponential valuation of the main corporations dedicated to the exploitation and sale of the main energy resources.
In this sense, the sanctions against one of the world’s main exporters of these strategic resourcess ended up benefiting companies capable of satisfying a growing demand and with a logistics apparatus that is sufficiently consolidated to deal with a wide international distribution.
price hike
The current international situation, and not only the policy followed by Vladimir Putin, explains why energy prices experience their greatest increase since 1973. In the three months from April to June, the US crude oil benchmark averaged around $109 a barrel, up 64% from the same period a year ago, according to data from the Bloomberg agency. And in this last year, the cost of crude oil rose 53%, while that of natural gas, 148 percent. In different projections, it is expected that the cost of energy will skyrocket by 50% in 2022.
Not coincidentally, the five major oil exporters are the ones that have become richer in this whole process. Indeed, it is estimated that British Petroleum, Shell, Total Energies, Exxon and Chevron they generated, together, profits of 82 billion in the last year, that is, 2,600 dollars per second.
Although they were hit by the restrictions due to covid 19, and during the first quarter of the year they had losses due to the uncertainty of the conflict in Ukraine and due to the departure of their investments from Russia, for the large oil corporations everything improved in the second semester of 2022. To the point that directors of the American Exxon and Chevron announced a few days ago that their profits had increased to record levels between the months of April and June.
Benefits
The same could be said about the other companies. While the Anglo-Dutch Shell multiplied its profits by five, reaching 18 billion dollars during this second semester, the French TotalEnergies made a profit of $5.7 billion. From British Petroleum it was also announced that it recorded a record profit for the same period.
The global imbalance produced by the sanctions against Russia benefited the main oil companies, that is, the big players in the international system. But also this phenomenal process of concentration of capital caused the uncontrolled increase in the price of gasoline and, consequently,, inflationary processes that, in different ways, affect the economic reality of much of the planet.
The high rate of return of these companies is explained by two fundamental reasons. In the first place, its rapid capacity to ensure distribution and sales on the European continent, a market that, due to distances and costs, was fed by Russia until the application of sanctions. Secondly, and precisely to sustain the high price of oil, the big companies decided not to invest in the exploitation of new deposits and, instead, use rising profits to buy back their own sharesfor the benefit of its main shareholders and for speculative purposes.
In addition to the oil corporations, the United States has made astronomical profits from the sale of liquefied gas. According to statements by the Energy Information Administration, at the end of July the United States became the world’s largest exporter of liquefied natural gas. Similar to what happens with oil, exports grew by 12% in the first half of this year, also taking into account that two thirds of its gas sales have a European destination: If the Old Continent depended 41% on Russian gas, Germany, its economic engine, required no less than 55%.
costs
However, and beyond the fabulous profits of the main corporations linked to energy, the economic reality of The United States is today marked by year-on-year inflation of 9.1%, which implies a new record in the last forty years. Its main vector is the rise in the average price of regular gasoline, which in just one year registered a growth of 48.9%.
Against this background, the forecast that Exxon’s earnings will double to $43 billion this year alone, they only cause discomfort and growing indignation in sectors of the middle and working class, traditionally, an important electoral base of the Democratic Party today in government.
Surely with a combination of astonishment, but also of electoral pretensions, the president Joe Biden mentioned last June 10 that “Exxon has generated more money than God this year”. More than enough reason to demand new investments from its executives and, particularly, that they comply with their tax obligations…
Beyond the religious allusion, it was a complete political statement coming from none other than the president of the United States, regarding the uncontrolled functioning of a cumulative system that, in this case, reaps the benefits of Russia’s separation as a key player in the international supply of energy.