Big Oil Misers

Big oil companies profited mightily during the Bush years but still refuse to make investments in clean-energy technologies and fuels, write Daniel J. Weiss and Alexandra Kougentakis.

ExxonMobil's headquarters in Irving, TX. Like other big oil companies, Exxon spends millions of dollars on promoting a clean, green image while spending very little on investments in clean-energy technologies and fuels. (AP/LM Otero)
ExxonMobil's headquarters in Irving, TX. Like other big oil companies, Exxon spends millions of dollars on promoting a clean, green image while spending very little on investments in clean-energy technologies and fuels. (AP/LM Otero)

It should come as no surprise that last year’s record high oil prices also led to near record profits for big oil companies. The price of oil climbed from January 2 to July 14, 2008, repeatedly setting new price records until it peaked at $147 per barrel—more than twice the price of the previous year. The big five oil companies—BP, Chevron, Conoco Phillips, ExxonMobil, and Shell—made record profits during the first three quarters of 2008 due to these record prices. When oil prices collapsed along with the world’s economies, the oil companies’ profits were reduced, too. However, the big five companies still made a combined profit of $100 billion for 2008 ^ (see note below). The sum is the second-highest combined big oil profit on record, exceeded only by the 2007 combined total of $123 billion.

The 2008 big oil profits bring the grand total under the two terms of the Bush administration to $656 billion, which is nearly two-thirds of a trillion dollars. Given the urgency to restart the economy with clean energy investments, and the need to slash U.S. oil use, you would expect these wealthy energy companies to be taking steps to develop new clean-energy technologies and fuels to address these economic and security concerns. Despite their soaring earnings, the big five companies were very stingy with investments in renewable and low-carbon energy technologies and fuels that would reduce oil dependence. In fact, a CAP analysis of their investments reveals that the big five oil companies invested just 4 percent of their total 2008 profits in renewable and alternative energy ventures. This reality contrasts with their ads that promote greener, cleaner images.

After oil prices hit a record last July, the August unemployment rate hit a five-year high of 6.1 percent and has continued to rise. Some jobs losses were directly related to high oil prices, such as in the aviation industry, which was forced to make major cuts to be able to handle the high price of jet fuel. Further, as households were forced to cut back on spending to keep up with exorbitant gas prices, sectors such as retail also purged payrolls. In June 2008, CNN reported that “many economists say job losses could intensify during the rest of the year due to rising energy prices.”

ExxonMobil, the largest publicly-traded American corporation, accounted for nearly half the 2008 oil profits. With over $45 billion in net income for 2008, Exxon earned the equivalent of nearly $150 for every U.S. resident. Despite being the highest earner of all the oil companies, ExxonMobil invested the least in renewable energy—less than 1 percent compared to its 2008 profits. It also invested the least in absolute dollars.

While oil prices steeply declined in the fourth quarter last year, all but one of the Big Five saw net profits in excess of $20 billion. These enormous profits were primarily due to record prices at the pump, which squeezed the budgets of everyday Americans. The big oil companies were worried about the impact of these huge profits on their images while Americans were bearing the burden of record prices. So to soften the public’s perception, these companies launched a green public relations offensive to convince the public that they were part of the energy solution, instead of part of the energy problem.

Media tracking group TNS Media Intelligence reported that $52.5 million was spent by the oil industry on greenwashing advertisements—advertisements boasting about investments in wind and solar power or efficiency while the companies did very little—in the first quarter of 2008 alone. However, a CAP analysis of actual company investments in renewable energy and energy efficiency indicates that the PR campaigns are little more than empty rhetoric.

For example, ExxonMobil spent $100 million on advertising in 2007, (its 2008 advertising totals are unavailable). Some of its ads catalogue ExxonMobil’s “efforts” to combat global warming, with messages that include “saving energy and reducing greenhouse gas emissions.” This ad ignores the millions of dollars Exxon pumped into funding organizations that questioned the existence of global warming. Exxon’s television ads similarly talk about global warming, efficiency, and alternative energy sources, concerns not reflected in investments.

chevron ad

Chevron’s Will You Join Us campaign asks Americans to reduce their own energy use while the company fails to change its own behavior.


Chevron has its own advertising campaign to tout its green credentials. The company is spending millions to disseminate its “I Will” message on newspapers, television, and even on the sides of buses. But Chevron made a total of $23.9 billion in profits in 2008 while investing only 5 percent of its total profits in renewable and alternative energy ventures.

Other companies have also engaged in major greenwashing advertising campaigns in an attempt to protect their images during record gasoline prices and profits. BP has a whole series of cheerful animated commercials, and the BP logo itself is a green and yellow sunburst-like flower. BP’s profits for 2008 were $21.2 billion, yet it invested only seven cents in its alternative energy unit for every dollar of profit.

Similarly, Shell has recently launched a major new web advertising campaign that emphasizes the company’s focus on technology and innovation. However, the majority of these advertisements focus on technology for the extraction of hard-to-access petroleum reserves, such as tar sands, which produce huge amounts of greenhouse gases and toxic waste. In addition, Shell just announced a moratorium on investments in wind and solar energy (see "Big Oil’s small investments" section below).

The advertising campaign by the American Petroleum Institute—big oil’s lobbying muscle—reflects the oil industry’s real agenda. Instead of exaggerating the green credentials of oil companies, their “Energy Tomorrow” ads argue that oil is the fuel of the future. The latest advertisement advocates drilling for oil and gas in previously protected coastal waters. “Increased production of domestic oil and natural gas will… drive our 21st-century economy…Maybe that’s why most people support putting more of America’s oil and natural gas to work.” The claim that increased production of oil and natural gas would drive the economy has been disputed by President George W. Bush’s Energy Information Administration, which determined that “access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030.”

Big oil investments, 2008*

Company – 2008 data Exxon Mobil Shell BP Chevron Conoco Phillips
Profits (millions) $45,220 $26,288 $21,157 $23,940 ($16,830)
Amount invested in stock buybacks and dividends (millions) $40,100 $13,307 $11,644 $8,000 $11,029
Investments in stock buybacks and dividends compared to 2008 profits 88.7% 50.6% 55.0% 33.4% ^ (see note below)
Amount invested in renewable energy (millions) $10 $500 $1,500 $1,250 $650
Investments in renewable and alternative energies and efficiency compared to 2008 profits <1% 1.9% 7.1% 5.2% ^ (see note below)
Contributions to federal candidates and parties for 2008 election cycle (millions) $1.2 $0.3 $0.5 $1.0 $0.7
Lobbying in 2008 (millions) $29.00 $3.3 $10.5 $14.5 $8.5

And API’s assertion that “most people” support more oil and gas drilling is misleading at best. An NBC/Wall Street Journal poll asked “When it comes to addressing our energy problems, which one of the following do you think should receive the most emphasis?” (italics used for emphasis). Six of 10 respondents favored “developing alternative energy sources.” Only one quarter supported “exploring and drilling for oil in the United States.” A more recent poll by the Center for American Progress shows that 76 percent of Americans actually feel that "America ’s economic future requires a transformation away from oil, gas, and coal to renewable energy sources such as wind and solar." And by two to one, Americans favor more financial support and incentives for alternative sources of energy, such as wind and solar, over support for oil and gas.

The commitment of the oil companies to renewable energy is also undermined by how much they spend to counter legislation that would support clean energy development over oil. Case in point: More than $65 million was spent on lobbying by ExxonMobil, Chevron, Conoco Phillips, Shell, and BP in 2008. ExxonMobil had the second-largest lobbying expenditures of any company in any industry. What’s more, total lobbying expenditures in 2008 for the five companies far outstripped those of 2007, when $37.7 million was spent to pressure lawmakers to protect industry interests.

The big five companies also attempted to curry favor with politicians by donating money to campaigns via oil company political action committees. The 2008 cycle saw $3.6 million in contributions to federal candidates and parties. Four out of the five companies are in the top 10 of oil and gas contributors to federal candidates and parties. Unfortunately, these contributions and their lobbying efforts have been largely successful. Last year they were able to whittle down the repeal of $25 billion in tax breaks and recovered royalties to only $8.9 billion as part of the Emergency Economic Stabilization Act of 2008—about one-third as much as originally proposed in June 2007.

The good news is that President Barack Obama’s proposed budget would further reduce taxpayer support for oil companies awash in profits. It would eliminate another $31.5 billion over a decade by repealing tax breaks and recovering lost royalties. The new measures include “closing loopholes, charging appropriate fees, and reforming how royalties are set.”

The Obama administration believes that oil companies don’t need any more money from taxpayers. Testifying before Congress on March 3, Office of Management and Budget Director Peter Orzsag urged elimination of some taxpayer support for big oil companies. “Although the administration supports the responsible production of oil and natural gas as part of a comprehensive energy strategy, excessive government subsidies distort market signals and slow the transition of the economy from fossil fuels to clean, renewable sources of energy.”

With a growing federal budget deficit, taxpayers should not have to subsidize companies that made two-thirds of a trillion dollars over the past eight years. On March 26, both the Senate and House Budget Committees included President Obama’s proposed cuts to big oil subsidies in the budget resolution. The House budget committee voted for the budget proposal by 24 to 15, while the Senate voted by a margin of 13-10 in favor. Both bodies plan to vote on their budget resolution this week.

The oil industry has alreay begun forcefully lobbying to preserve the handouts. The American Petroleum Institute is running radio ads that attack the budget proposal. The ads claim that lifting oil subsidies "could actually reduce local, state, and federal revenue." In fact, a state-by-state analysis indicates that taxpayers would actually save money if the hefty subsidies and tax breaks for oil and gas companies were lifted.

API also urges people to write to Congress to "oppose … taxes and fees on the oil and natural gas industry." Congressional allies of the oil industry such as Senator Mary Landrieu (D-LA) have joined the defense of handouts to big oil.

The bottom line is that big oil companies profited mightily during the Bush administration. Their $656 billion in profits enriched their executives and shareholders, while they invested precious little in the research of clean-energy technologies and fuels that are essential for our economy, security, and environment. Oil companies may be spending millions trying to convince people that they are committed to being part of a clean energy future, but their miserly clean-energy investments say otherwise.

Daniel J. Weiss is a Senior Fellow and Director of Climate Strategy at the Center for American Progress. Alexandra Kougentakis is a Fellow’s Assistant. For more information on the Center’s Energy policies, please go to the Energy and Environment page of our website.

^ The net loss by Conoco Phillips is due to its write-downs of more than $34 billion for domestic oil exploration and production and an investment in the Russian oil company Lukoil. If not for these costs, the company would have made a nearly $18 billion profit, making 2008 the record year $134 billion for the Big Five.

*Sources for table information: Quarterly reports were used to obtain company profits, share buybacks, and dividends; the Center for Public Integrity was the source for information on lobbying-federal contributions; renewable energy investments are based on CAP conservative average estimates based on reported commitments in company annual reports and sustainability reports, and in the case of Shell a private correspondence with the company.

Big Oil’s small investments


BP has an entire division devoted to “alternative energy.” Investments include biofuels, solar energy, wind energy, hydrogen power, and carbon capture-and-sequestration. The company’s most recent sustainability report pledges to invest $8 billion over a period of 10 years in alternative and renewable energy technologies. This $800 million annual investment is a paltry sum compared to the $125 billion made since 2001.

Recently, employees in BP’s renewable energy division in the United Kingdom were laid off with the cancellation of several clean energy projects, such as two power plants that would have captured and stored their carbon dioxide emissions. It is expected that global operations will be affected as well, and proposed wind farms in the United States may be delayed. Interestingly, the apparent investment caution has not prevented BP from pursuing a tar sands project in Canada, announced at the end of 2007.

bp logo

SOURCE: AP/Charles Dharapak

Oil from Canada’s tar sands is the most expensive form of crude oil to produce. The extraction and conversion of tar sands to a usable energy source can cause as much as five times the greenhouse gas emissions compared to conventional crude oil. Contamination of waterways by pollution from tar sands development is suspected of causing bizarre mutations of marine organisms. The pollution from these developments is also suspected of causing the high cancer rates and other health problems in the surrounding areas.

BP recently agreed to pay $180 million to settle a lawsuit filed by the federal government for "putting air quality and public health at risk." BP’s refinery in Texas City, TX, violated federal health safeguards for benzene, asbestos, and ozone-depleting chemicals. The settlement includes the installation of pollution controls to the refinery as well as a civil penalty and for a pollution reduction project.


Chevron has made some investments in alternative and renewable energy technologies and energy efficiency, including biofuels, geothermal, hydrogen, and solar energy projects. Ventures in Indonesia and the Philippines make Chevron the largest private geothermal power producer in the world. The alternative energy subsidiary Chevron Energy Solutions develops projects that include technologies that generate electricity from waste heat of industrial processes. In the United States, CES projects are estimated to reduce greenhouse gas emissions by 3 million metric tons.

But Chevron’s investments reflect its commitment to oil and relative disinterest in renewable energy. Its 2007 Corporate Responsibility Report notes “…the world’s consumption of energy is expected to grow 55 percent by 2030. The majority of that energy will be provided by fossil fuels.” The company invests a measly 5 percent compared to total annual profits in low-carbon energy programs.

What’s more, Chevron does not plan to reduce its greenhouse gases emissions. In 2007, it reported total net emissions of 60.7 million metric tons, but its 2008 goal was 62.5 million metric tons—an increase of nearly 3 percent.

Conoco Phillips

Conoco’s most recent sustainability review in 2006 emphasized biofuels as a key renewable energy investment. All renewable and alternative energy projects are part of the company’s “Emerging Businesses” segment, which also includes advanced hydrocarbon processes, energy conversion technologies to make liquid fuels from coal and other fossil fuels, and new petroleum-based products. The 2007 annual review mentions partnerships and collaborations on biofuels, but there’s no mention of solar or wind energy investments.

Conoco’s pollution efforts are also questionable. The company provided 2007 figures for performance metrics on air pollution and greenhouse gases. While its emissions of sulfur dioxide, nitrogen oxide, and volatile organic compounds declined between 2006 and 2007, these reductions are required by law. There are no federal restrictions on greenhouse gas pollution, and it rose by 0.5 percent.


ExxonMobil’s main area of investment in clean energy has been in the development of vehicle technologies. Advanced engine research aims to improve vehicle fuel economy by 30 percent, and the company conducts battery research for hybrid electric cars.

ExxonMobil is one of four sponsors of the Global Climate and Energy Project, or GCEP, at Stanford University (the other three are General Electric, Toyota, and Schlumberger Limited, which is an oilfield services corporation). This is a controversial university-corporate research program to develop clean-energy technologies.

As evidence of its support for new renewable technologies and fuels, the sponsorship of GCEP was cited by an ExxonMobil representative in a hearing last year before the House Select Committee on Energy Independence and Global Warming. Committee Chairman Edward Markey (D-MA) observed that Exxon’s investment of $100 million over a decade was almost embarrassing compared to its annual profit, which was over 400 times that amount. “Why is ExxonMobil resisting the renewable energy revolution?” Markey asked of ExxonMobil’s Senior Vice President Stephen Simon. Simon quickly cited the $100 million research program at Stanford. Chairman Markey replied, “$100 million? But you made $40 billion last year.”

ExxonMobil reports a 3-percent reduction in greenhouse gases since 2006, and a 23-percent reduction in emissions of VOCs, nitrogen oxides, and sulfur dioxide since 2004. Yet at the end of 2008, the company agreed to pay nearly $6.1 million for violating the Clean Air Act by failing to monitor sulfur dioxide pollution. A 2008 University of Massachusetts analysis ranked Exxon as the ninth in a ranking of top U.S. air polluters.

rex tillerson

Exxon CEO Rex Tillerson: "For the foreseeable future … the world will continue to rely dominantly on hydrocarbons."


The company’s greenwashing efforts are particularly outrageous given its support for organizations and people that disputed climate change science. The company’s actions and statements by its officers indicate that the ExxonMobil business model will continue to rely on oil dependence. CEO Rex Tillerson said: “For the foreseeable future—and in my horizon that is to the middle of the century—the world will continue to rely dominantly on hydrocarbons to fuel its economy.”

Recently CEO Tillerson announced his support for a carbon tax to address global warming, but some analysts are skeptical of his motives. Susan L. Smith, a law professor at Willamette University, notes that a call for a carbon tax “certainly muddies the waters for quick passage of a climate change bill. And maybe that’s the real point.”


From 2003 to the first half of 2008, the Shell Oil Company invested $1.75 billion in alternative energy and carbon dioxide reduction projects. This is a small sum compared to the company’s profits of $133.5 billion during the same period. It declares itself the world’s largest distributor of conventional biofuels, and it has also made investments in solar and wind energy projects in the United States and abroad.

shell sign


But in 2007, Shell dumped many of its solar projects. While total profits for the gas and power division, which includes wind and solar projects, was $2.8 billion that year, only one wind energy project was mentioned in the 2007 annual report. Even though Shell made the second-highest profit of the oil companies for 2008 at $26.3 billion, it invested less than 2 percent in renewable energy projects.

Shell recently reiterated its disinterest in renewable energy when the company announced a moratorium on new investment in wind and solar energy. On March 17, Linda Cook, the head of Shell’s gas and power unit, announced that, "We do not expect material amounts of investment in [wind and solar energies] going forward." In response to the decision, John Sauven, the executive director of Greenpeace UK, noted, "After years of proclaiming their commitment to clean power, [Shell is] now pulling out of the technologies we need to see scaled up if we’re to slash emissions."

Like BP, Shell is also involved in significant investments in Canada’s tar sands while reducing investment in European wind and solar energy ventures, including the world’s largest planned offshore station, valued at $4 billion to $6 billion. Shell raised a major outcry in Europe in 2007 for an advertisement that was so blatant in its greenwashing that it was actually banned in Britain.

Between 2006 and 2007, Shell reported across-the-board reductions of greenhouse gases, VOCs, sulfur dioxide, and nitrogen oxides. But like its fellow big oil company Exxon, Shell was sued for Clean Air Act violations between 2003 and 2007. If found guilty, Shell could be liable for over $32 million in fines.


Big Oil executives protest President Obama’s proposal to reduce tax breaks

President Obama’s proposed budget would eliminate $32 billion in tax breaks and recover lost royalties over 10 years. Top officials of the big three oil companies oppose this proposal despite their billion dollar profits over the past eight years.


Chief Executive Officer Rex Tillerson: "Any steps which cause the industry to be less competitive overseas or cause the cost of development here at home to go up, ultimately, in my view, does not serve the interests of the American people."

ExxonMobil made $45.2 billion in profits in 2008, and a total of $235 billion from 2001-2008.


Marvin Odum, the president of Royal Dutch Shell’s U.S. operations: "It’s a concerning area, of course, because as you put more royalty and tax burdens on the industry, particularly a cyclical industry, you just have to be cognizant of the potential impact it has on investments. That’s not something you can put real definition to, but I think it’s a concern."

Shell made $26.3 billion in profits in 2008, and a total of $158 billion from 2001-2008.


David O’Reilly, Chief Executive Officer: “Raising taxes on domestic production is the wrong thing to do.”

Chevron made $23.9 billion in profits in 2008, and a total of $99 billion from 2001-2008.

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Daniel J. Weiss

Senior Fellow