Abstract
The 2022 oil and gas crisis resulted in record fossil-fuel profits globally that rehabilitated the oil and gas industry, obstruct the energy transition and contributed to inflation. We analyse the size and the distribution of financial beneficiaries of these unprecedented profits across countries and across wealth groups within the United States, using company income statements and comprehensive ownership data, to construct a global network of shareholdings with 397,619 nodes. We estimate that globally, net income in publicly listed oil and gas companies reached US$916 billion in 2022. The United States was the biggest beneficiary receiving US$301 billion in fossil fuel profits both from domestic extraction and through global shareholding, more than U.S. investments of US$267 billion in the low carbon economy that year. Analyzing the U.S. distribution including privately held US companies, 51% of profits went to the wealthiest 1%, predominantly through direct shareholdings and private company ownership. In contrast the bottom 50% only received 1%. The incremental fossil-fuel profits in 2022 over those in 2021 were enough to increase the disposable income of the wealthiest Americans several percent and compensate a substantial part of their purchasing power loss from inflation that year, thereby exacerbating inflation inequality. Record fossil-fuel profits also reinforce existing racial and ethnic inequalities and inequalities between groups with different educational attainments. Our results also show that only a small share of overall profits benefits institutions that serve the wider public such as pension funds. We discuss how windfall profits taxes could be used to both lower inequality and accelerate the energy transition as increasing geopolitical tensions and climate impacts portend continued volatility in oil and gas markets.