How much longer can we tolerate this price-gouging racket of an energy sector? | Damian Carrington

Today’s soaring energy costs are frightening. But the deeper truth, often overlooked, is even more shocking. The global oil and regional gas markets are anything but – they are rackets, a profiteer’s paradise. If they operated in a single legal jurisdiction, they would have long been deemed illegally rigged.

The excess, unearned profits of the oil and gas industry are astronomical, recently revealed as $3bn every day for the past 50 years. That’s $1tr a year, on average, from the pockets of you and me into the bank vaults of dictators and big oil. It may be the biggest shakedown in history.

That has consequences. The power bestowed by these colossal sums has changed the world, driving both geopolitical conflict and the climate crisis. But this price gouging also contains the seeds of its own destruction and the green shoots are starting to show.

Cartels have dominated the oil and gas industry for so much of its history, it has become normalised. But, if you take a step back, the absurdity becomes clear. Countries such as Saudi Arabia can produce a barrel of oil for a few dollars, sell it for $100 and still talk about cutting production. Russia’s invasion of Ukraine and manipulation of gas supplies has sent prices through the roof, sending yet more billions of unearned dollars into the Kremlin.

Such behaviour is deeply embedded. From the 1920s to the 1970s, a group dubbed the “international petroleum cartel” by the US Federal Trade Commission dominated. Its members were Exxon, Shell, Chevron, Mobil, Texaco, BP and Gulf. Opec was formed in 1960 by Saudi Arabia, Kuwait and others to challenge it. It succeeded, quadrupling prices by the end of the 1970s.

Today, an expanded Opec remains influential, as do US companies following the fracking revolution, which was enabled by politicians flush with fossil fuel cash. Governments across the world, lobbied or controlled by fossil fuel interests, have colluded by keeping us addicted to oil and gas long past the time the climate dangers had become clear, reaping huge tax revenues along the way.

Remarkably, a €50 lawsuit filed quietly in April at a court in Berlin may just change all this. The lawyer Armin Steinbach, acting alone, aims to use EU competition law to prove that Opec is influencing prices illegally. If he wins his test case, every person in the EU would be able to seek damages from the organisation. “This would mean the end of Opec in the European market. It would be a huge thing,” he told me.

It’s a long shot. Ending the rent-grabbing of the oil powers through market reform may even be impossible. But we already know how to escape the grip of fossil fuels – stop using them. A glimmer of what that could look like was seen after the 1970s price shocks, which drove energy-saving measures around the world, such as the 55mph speed limit in the US.

These efforts were stymied, but today is different. The inflated cost of oil has driven its use out of almost all sectors bar transport, and for that we now have a permanent solution – electric vehicles. Almost one in three new cars in China, the world’s biggest market, are now electric. Renewable energy is now the cheapest option in much of the world and could squeeze out gas-fired power stations if vested interests are faced down. Energy-efficiency drives are under way again in many countries, though incomprehensibly not in the UK.

The potential prize is huge. Not just truly affordable energy, but an end to the climate crisis that threatens us all and the fossil-fuelled regimes that oppress so many. Big oil will not go without a fight, but it may be doomed in any case, says the analyst Kingsmill Bond at the Rocky Mountain Institute.

“They can make super-profits for a while longer,” he says. “But the more they do so, the greater the incentive to change. In its current orgy of cashflow, the industry is thus sowing the seeds of its own destruction. It is one final party.”

But for how much longer can we tolerate this last hurrah? We are all footing the party’s bill, through our diminishing bank balances and the increasing extreme weather impacts of global heating. It is time for the racket to end.