Feb 2, 2012

Oil & Gas, the World's Wealthiest Industry

How Rich is the Oil & Gas Industry? As a response to Obama's recent announcement that it's time for America to "end oil subsidies," I did the math on a simplification of that question. I took the very reputable Financial Times' Global 500 2011, a list of the world's 500 most valuable private companies at the end of 2010 published in July of 2011, and asked a few questions.1  

Here are my core questions. What percentage of the world's wealthiest private companies belong to the oil & gas industry? How much total $$ (moola) were those O & G companies worth at the end of fiscal 2010? What percentage of their wealth is the total 500? I ask these questions because I have a hunch that transitioning off a fossil fuel economy is a much bigger job than we enviros have yet realized. We tend to paint the picture as being ethical, about protecting human health, the climate, and Creation itself. "How could those fossil companies be so insensitive?"

But Exxon's making record profits these days -- year after year. Is that good? If Exxon's success is indicative of anything it's that a lot of folks in Oil and Gas are enjoying a gold rush. Big big big. And we enviros need them to just stop. Asking them to turn away from all this success is kind of like asking the New York Yankees during a 100 year winning streak to become a basketball team, isnt' it?

I'm serious. 

Cutting to the chase:
  • 54 of the world's wealthiest 500 companies 2010 were in the Oil & Gas industry.2
  • These 54 companies had a combined market value of $4.17 Trillion.3
  • Conclusion: Out of the world's wealthiest 500 companies 15.9% of wealth belonged to Oil & Gas at the end of 2010.
But allow me to add a little more detail. Oil & Gas -- by far the wealthiest sector per capita (per company) on the entire list, placed five companies in the world's wealthiest private companies TOP 10 LIST: #1, ExxonMobil (USA), #2 PetroChina, #5 PetroBras (Brazil), #8 Royal Dutch Shell (Netherlands), #9 Chevron (USA). For this particular year, the Oil & Gas sector earned $7.234 Billion on average per company. Compare that to the average per company earnings in other wealthiest sectors: "Software & Hardware" earned an average of $4.883 Billion per company, "Banks" sector $4.577 B per company, "Mining" $4.489 B per company.

Going one further -- the 2006 Financial Times list of valuations for non-public (government-owned) companies shows Saudi Aramco to be worth more than twice as much as ExxonMobil in 2010. More impressively, 9 of the world's top 10 wealthiest "non-public" companies are Oil & Gas producers, too. These 9 non-public companies show a combined market valuation of nearly $3 Trillion. That's +7 Trillion, speaking loosely, for Oil & Gas producers globally... Global GDP at the end of 2010 was around $63 Trillion, making global oil & gas companies worth something like 11% of global GDP.

Back to the point -- It's interesting to note that America's Oil & Gas companies, leading the private sector in both profits and overall wealth, complain they cannot afford to pay for the pollution their products and services generate and need government assistance just to continue operating.


Broader analysis on all this soon, plus copies of my data/spreadsheets.4
Please stay tuned, thanks.

1) Note that everything you read from here on is based on that "top 500" list only. 
2) My term, "Oil & Gas Industry" here includes Oil & Gas Producers and Oil and Gas Service and Equipment Providers, as delineated by the Financial Times. Note also that America's Oil & Gas Industry recv'd 44% of total subsidization monies, 1950-2010, about 4xs more than any other energy type, and that many Republicans voters support ending fossil fuel subsidization.
3) $4,170,672,400,000.00 to be exact. 
4) The Financial Times 2011 Top 500 List is not yet available.  

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