If correct, this is an extraordinary piece of financial news, that deserves maximum publicity.
The Institute for Energy Economics and Financial Analysis reports that:
“ExxonMobil, BP, Chevron, Total, and Royal Dutch Shell (Shell), the five largest publicly traded oil and gas firms, collectively rewarded stockholders with $536 billion in dividends and share buybacks since 2010, while generating $329 billion in free cash flow over the same period.”
This means that
“Since 2010, the world’s largest oil and gas companies have failed to generate enough cash from their primary business – selling oil, gas, refined products and petrochemicals – to cover the payments they have made to their shareholders.”
Pouring money into shareholders is not an obvious investment in future business other than in perhaps suggesting you are a good investment, and trying to increase the share prices, which are often tied to bonuses.
“Asset sales have been a crucial source of funding of dividends and share buybacks for the supermajors.”
This is not using asset sales to make new investments, or carry out new explorations or research into technology or new business ventures – this is odd.
We should also note that oil companies do not pay the tax they should, which also makes them precarious if governments were to insist that they should.
Again from the IEEFA
Australian company Telstra paid twenty times as much tax as all of the oil and gas companies in Australia despite having similar revenues according to the latest data provided by the Australian Taxation Office (ATO).
Companies working in Australia’s oil and gas industry paid just $81 million in tax in 2016-17, while Telstra with a comparative revenue of $26,948 million paid $1,644 million in tax.
“Catherine Tanner, the Chief Executive Officer of BG Group promised around $1 billion a year in taxes and $300 million a year in royalties for its petroleum project in Queensland,” says Robertson.
“The reality is BG Group paid no tax in 2016-17 nor did its parent Shell Australia
IEEFA notes $195 billion of Australia’s natural wealth is being exported with $0.00 royalties or royalty-type petroleum resource rent taxes (PRRT) being collected.
One way of interpreting both pieces of news together, is that oil company executives think they are heading for trouble, and they want to shovel as much money to their established shareholders (including high level executives) as they can, possibly out of defrauding tax-payers, before they collapse.
Tags: fossil fuels, free markets
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