2020 was a year of extreme events that created uncertain and trying times across the world. The prominent culprit of this was the outbreak of the COVID-19 pandemic which froze all business and travel for over six months. COVID’s grip on the world sent the global economy plummeting due to a lack of production, distribution, and consumption. Global energy, often thought of as a pillar industry of the global economy, was one of the economic sectors hit the hardest by the pandemic. The companies most impacted by this downturn were predominantly the largest oil and natural gas producers in the West–Exxon Mobil, BP, Shell, TotalEnergies, and Chevron. Combined, as these corporations had a total loss of $76 billion in 2020. This was partially due to a lack of travel, and therefore a lack of demand for energy producing businesses. However, gold was on the horizon for these gas giants as they looked to the future of global energy. The energy industry is at a turning point as global energy reliance shifts from oil and other fossil fuels to sustainable forms of energy. Even natural gas corporations knew that the reign of fossil fuels was finite and began to invest into mergers with renewable energy companies and carbon offset programs. COVID-19 was the first big blow in a series of events leading to the demise of fossil fuel production pioneering a greener and cleaner future. Yet, contrary to some consumer sentiment and a push for green energy, the five aforementioned energy companies earned record breaking profits in the year of 2022 totalling a combined $200 billion dollars, proving 2020 was not a turning point in the global energy sector but rather a mere speedbump on Big Oil's road to success. 

How is this possible? Why is gas growing? It is as though the global energy market is diverting resources from the promising future of renewable resources and reverting to the reliable relationship it had with fossil fuels. However, this is not exactly true. Countries all across the globe are pouring resources into sustainable energy solutions, and more innovative corporations are saturating the market with clean energy options. The question remains, what was so special about 2022? 

The business and political cycle of 2022 oscillated between positive and negative energy trends. For example, in the positive direction, South America as a whole moved towards politicians with very promising agendas which include globalizing their domestic economic market while transitioning toward renewable energy. Furthermore, it was another year that the world was moving away from COVID-19, thereby allowing markets to continue to open up and reclaim their pre-COVID levels of growth. However, there were prominent negatives as well. Inflation grew globally and had an intense impact on most western nations, while climate change strengthened natural disasters and displaced many individuals. While all of these impacted the global market in various ways, there was one distinct event in 2022 that has had the greatest impact on global energy trends: Russia's invasion of Ukraine. 

On February 24, 2022, Russia launched a special military operation to force the demilitarization of Ukraine. Russia’s advance in Ukraine was assumed to be less of a war and more of a conquest, so the world was shocked when Ukraine absorbed Russia’s initial blow and began to counterattack. James M. Lindsay, the senior vice president and director of studies at the Council on Foreign Relations stated, “In September, the Ukrainians launched a counteroffensive that liberated the northeastern city of Kharkiv. Six weeks later, Russian forces abandoned the southeastern city of Kherson, spurring speculation that Ukraine might seek to reclaim Crimea, which Russia seized in 2014” (Lindsey 2022).  Like all wars, this had serious global ramifications. Most notably it highlighted massive political divisions throughout the world. Western nations rallied behind Kyiv while China and most countries in the Global South stood neutral. The West was swift to react as European nations began formulating a plan to reduce their reliance on Russian fossil fuels by two-thirds by the end of 2022. The United States supported this plan and set sanctions alongside European countries to hamper Russia's ability to sell crude oil. Vladimir Putin then countered by signing a decree “demanding that all buyers from ‘unfriendly’ countries pay in rubles starting from April. They would have to open special accounts with Russia’s Gazprombank JSC, in foreign currency and rubles, to handle their payments” (Bloomberg 2022). Nations who were uncooperative had their gas shut off immediately, so people in Poland, Denmark, Finland, and the Netherlands quickly faced nationwide shortage of necessary resources. However, even the nations in Europe that abided by the decrees did not receive the necessary amount of gas, as Putin cut off Russia’s largest gas pipeline to Europe.  This led to repercussions for Europe and the energy market, as 33 percent of all of Europe's gas is supplied by Russian pipelines. European energy ministers were forced to take action, making a policy to cut gas use by 15 percent through the winter of 2022/23 while encouraging domestic entities to produce energy to maximum capacity. The demand for gas all over Europe increased exponentially, as countries needed a new ethical and reliable source to help make up for the losses felt from the refusal of Russian gas. Thus, a golden opportunity for big oil companies was created. 

Aside from the war between Russia and Ukraine, an increased demand in gas was prominent globally in 2021-2022 due to a relaxation on Covid restrictions and a resurgence of traveling by consumers. Big Oil was therefore already on track to make profits in 2022. The war between Russia and Ukraine allowed for Big Oil profits to become “windfall profits”–a sudden and unexpected spike in earnings caused by a one-time event that is out of the norm (The Economic Times). The demand from consumers all across Europe for energy to survive the winter ahead, alongside the demand from American consumers who were anxious to get back to traveling, was the perfect storm for Big Oil to break records. All oil and gas prices across the western world soared, with the US Energy Administration Records recording gas prices as high as $4.99 a gallon in the week of June 16, 2022. In Europe prices were even higher. In Germany, for example, gas prices reached an all time high of 8.93 USD/Gallon in May of 2022. France and the Netherlands also reached all time highs, at 8.71 USD/Gallon and 10.11 USD/Gallon respectively in March of 2022. There were record breaking gas prices all across the Western world as people were desperate for gas, whether it be for travel or staying warm in the winter.  Consumers were willing to pay nearly any price. And due to this reliance, oil companies could set prices as high as they wanted and face minimal pushback, resulting in big oil making an accumulation of $200 billion in 2022. 

The war between Russia and Ukraine shows no signs of stopping, but Big Oil’s capitalization on the conflict has subsided significantly. In the United States, while gas and oil prices have not gone back down to their pre-COVID rates, many economic indicators such as the United States’ EIA have highlighted a significant decrease in natural gas prices across the West compared to 2022. Europe, still at the forefront of the gas and oil conflict due to the war, has borne the greatest burden. They survived the winter using only a fraction of the energy they once received and did so with minimal casualties, demonstrating Europe's ability to adapt and as well as its domestic resourcefulness. Europe has also exhibited international resourcefulness by substituting its energy needs through various trade agreements. Many European nations now receive imports of liquid natural gas from the United States, as well as other forms of gas and oil from Nigeria and Algeria. Thus, the gap in the energy market left by Russia has slowly subsided. Europe's resourcefulness combined with strong global initiative to promote sustainable energy will further reduce the price of oil and gas with the passage of time. 

Overall, big oil companies, specifically, Exxon Mobil, BP, Shell, TotalEnergies and Chevron were prepared in 2022 when presented with a massive opportunity created by two once in a lifetime events, a pandemic and a war between two incredibly energy abundant countries. While their capitalization has caused hardship for many individuals, they were doing what big businesses around the world were meant to do, make money–and they made a lot of it. However, as the world marches forward into the future the diversification of energy reliance will continue to grow, possibly leaving big oil and gas behind. 

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