'Obscene amount of earnings': What is Shell using its record profits for?

The record profits that energy companies made in 2022 have raised questions about what’s driving revenues, and what increased funds are being used for.

And how companies like Shell are using the “obscene amount of earnings” they’ve accumulated is something the public needs to be concerned about, said Jeff Rubin, an economist and former CIBC World Markets Chief Economist.

“In the past, they would have plowed those earnings into capital expenditures, to develop new reserves, bring on new supply, which in turn, would moderate oil prices over the cycle. They’re not doing that anymore,” said Rubin in an interview with CTV’s Your Morning Wednesday.

Instead, Shell is turning itself into an “instant teller machine” through share buybacks and dividend hikes for the benefit of their shareholders, said Rubin.

Shell said on Feb. 2 that its annual profits doubled to $39.9 billion in the final three months of 2022, as natural gas prices climbed after Russia invaded Ukraine. U.K. energy company BP also posted record earnings on Feb. 7, and so did U.S. company Exxon last week.

But as other jurisdictions in places like the U.K. are taxing energy companies on surplus profits, that has not occurred yet in Canada.

For more information about whether Canadians should expect to see high gas prices for the foreseeable future, watch the full interview with Jeff Rubin in the video above.