The oil industry isn’t looking too great, folks. That’s especially true for Exxon, which has lost upward of $US1 ($1) billion due to the economic crisis last quarter alone. Its downward spiral isn’t over, though.
In a filing to the Securities and Exchange Commission on Wednesday, the oil giant laid out how much the coronavirus has damaged its business. With the world on pause, all the oil these companies typically sell to fuel planes and cars have been sitting around with nowhere to go. Oil prices have also been suffering across the board due to the pandemic. The company said in its filing that if prices stay the way they are for the rest of the year, its proven oil reserves to drop 20% from the 22.4 billion oil-equivalent barrels it reported last year.
Oil reserves only count as “proved” when they meet specific economic guidelines set by the SEC, including the cost and amount of spending required. With this drop in oil prices and the need to cut costs, Exxon could no longer include 4.5 billion oil-equivalent barrels of reserves under that definition. According to Bloomberg, this is enough oil to supply every oil refinery in the Gulf for 18 months.
The company is one of a number in serious trouble due to the pandemic. BP, Shell, Chevron, and other smaller oil firms have all faced serious stress from the pandemic and lowered demand. They’ve announced widespread financial losses, layoffs while resorting to lashing out at activists and not paying loans in an effort to stave off further fallout. But this is a moment of reckoning, and it’s about time.
The fossil fuel industry has brought about widespread catastrophic destruction by speeding along the climate crisis, which has led to impacts as widespread as collapsed ice shelves and flooded nations. It’s about time oil and gas companies bear the burden. This loss of revenue for companies like Exxon, BP, and Shell is nothing compared to the loss of human life countless communities across the globe face due to the climate crisis. The oil industry is not part of the a thriving future, though it’s vital that workers be protected from the fallout of its collapse. But until it’s gone forever, the planet will continue to suffer.