When did critics stop caring about oil profits?

To the Editor:
Until recently, attacks on oil-company profits were standard fare among anti-fossil-fuel activists. Back in 2013 the Center for American Progress' Daniel Weiss complained: "Big Oil is swimming in an endless river of profits."

It was the same song, different verse several years before. "Big Oil is once again riding high oil prices to large profits," began a 2010 story in Grist magazine.

But if higher quarter-over-quarter, or year-over-year, profits, were cause for such disapproval, why isn't the Left celebrating the recent earnings declines among energy companies? Major oil firms from Exxon Mobil to ConocoPhillips to Chevron all reported significant earnings declines in 2014 due to supply-side technology breakthroughs responsible for falling oil and gas prices.

Specifically, Exxon's net income fell by $1.78 billion in 2014. ConocoPhillips posted a $39 million loss in the fourth quarter of 2014 — its first such deficit since 2008. The oil division of Europe's largest energy firm, Royal Dutch Shell, made next to no money in the final quarter of last year.

Among most Americans, no tears will be shed over these disappointing earnings reports — nor should they be. Paying less to heat homes and fill gas tanks is a good thing.

Lower prices reflect a spectacular increase in oil and gas supply, thanks to new technology.

The United States is now producing 9.3 billion barrels of crude oil per day — levels not seen since 1978. Oil prices have fallen from last year's peak of more than $100 a barrel to around $50 a barrel today.

Increased natural-gas production has dramatically reduced prices. According to the Energy Information Agency, the United States produced 21.6 trillion cubic feet of natural gas in 2009. Last year, that number shot up to 27.3 trillion cubic feet, a 26 percent rise.

But if high, growing oil-industry profits are some sort of atrocity, as green activists tirelessly preach, shouldn't environmentalists be popping some organic bubbly?

Instead, there is deafening silence except to say that very large companies still make a large profit over the course of any year. That says little. Major integrated oil and gas companies have a return on equity and net profit margin of around 12 percent and 5 percent, respectively, well in the middle of the range of U.S. industries.

The silence of the activist community is evidence that their anti-profit fixation was (and is) little more than a rhetorical gambit. The recent earnings plunge demonstrates how little control oil firms have over their own bottom lines.

Profit hypocrisy is code for an animus for the oil and gas industry itself. Yet the fossil-fuel industry generates millions of jobs and hundreds of billions of dollars annually in wages and economic activity — and without consumer or taxpayer sacrifice. The same can't be said of the government-dependent renewable-energy industry, which continues to receive disproportionately large, and ever-increasing, public subsidies.

Oil-industry earnings might have made for good rhetoric back when profits were larger. But they were never a legitimate target for environmentalist outrage. The fact that green activists have quietly abandoned their anti-profit rallying cry is proof that they knew this all along.

Still, don't hold your breath. If quarter-over-quarter, year-over-year profits resume in 2016 or beyond, the same tired complaints will emerge. Environmentalists, alas, can recycle too much.

Robert L. Bradley Jr.
Founder and CEO, Institute for Energy Research