It’s never been a worse time to be an oil company. Even the biggest of Big Oil firms are falling apart like shoddily built McMansions on a patch of quicksand.
The latest to start to sink is Exxon and Chevron, which each reported their largest quarterly loss in history on Friday. This comes a day after reports emerged that Exxon is considering layoffs and other forms of cost-cutting while ensuring shareholders get paid. The stunning reversal of fortunes for some of the world’s greatest climate villains is another sledgehammer blow to the hegemony of oil.
Exxon lost $1.1 billion in the second quarter this year, according to its latest investor report. Last year over that same period, it recorded a profit of $3.1 billion. The company’s top line reason for the loss is an increasingly familiar one: “global oversupply and covid-related demand impacts.” Those two factors were vividly illustrated this spring when record amounts of oil was being stored in offshore tankers around the world and air pollution plummeted as people sheltered in place to avoid getting sick. Now, they’re showing up clear as day in Exxon’s accounting books.
All told, the company has suffered $1.7 billion losses so far this year. Which actually pales in comparison to Chevron, which reported a $3 billion loss, its largest since 1989. Bloomberg cheerily labeled a graph charting it as an “earnings bloodbath.” So yeah, that’s where we’re at.
The huge losses couldn’t have happened to nicer companies. Both have spent decades being total shitheads about the climate crisis, stalling action and denigrating activists as well as the very goal of decarbonization. They’ve been fighting a losing battle in recent years, though. Activists have successfully turned public opinion against Big Oil, and the finances of drilling and selling a toxic substance have become a little more challenging. A growing number of banks have said they will no longer fund risky forms of Arctic drilling and with smaller oil companies now defaulting on loans due to the pandemic, it’s possible the purse strings will pull even tighter.
Oil companies have been left to scramble to find other uses for a product going out of style. Petrochemicals have been an area gas and oil companies have expanded into aggressively, and the plastic industry has aggressively tried to use the pandemic to its advantage. That includes pushing the bunk idea that plastic bags are more sanitary in an effort to get states and cities to roll back or at least delay bag bans. In its earnings statement, Exxon said it would also look to capitalize on the pandemic by continuing a pivot to hand sanitizer and making plastic PPE. That’s good and all since those are objectively helpful things in a pandemic and will keep people employed. While it may seem like the pandemic will never be under control thanks to feckless federal leadership, though, making PPE and hand sanitizer are not a sustainable, long-term business strategy for a $177 billion company built on digging fossil fuels out of the ground to poison the planet. Then again, going back to business as usual isn’t exactly sustainable either. Luckily, there are some concrete steps to a better way forward.