Despite record profits and a growing pile of cash, the world’s oil and gas industry has been slashing its investments in exploration and new production.

Increasingly, as the above chart from a recent International Energy Agency (IEA) report shows, the industry is simply handing profits over to their shareholders as dividends or by buying back their shares.

What’s more, only a tiny (albeit growing) fraction of the industry’s cash flow is being invested in clean energy technologies, even at large European oil and gas companies that have prioritized diversifying into those areas.

The industry’s unwillingness to pour anything like the massive sums it once did into finding and developing new fossil fuel sources reflects two trends.

First, shareholders have made clear they won’t tolerate a repeat of the staggering losses investors experienced in the latter half of the 2010s. At the time, a race to expand unconventional oil production in the United States — the so-called fracking boom — pushed spending far beyond revenues.

Second, the companies face daunting projections about the strength of long-term demand for their products.

The takeoff of electric vehicles — especially in China, the world’s largest oil consumer — has led the IEA and others to forecast a peak in oil demand before the end of the decade. Meanwhile, the rapid growth of renewables and energy conservation advances in places like Europe have raised questions about future demand for natural gas.

The six biggest international oil companies had more than $150 billion in cash and cash-like assets in their coffers at the end of this year’s first quarter, The Wall Street Journal recently reported. Profits have soared since Russia’s invasion of Ukraine pushed up global prices for oil and gas.

Between 2010 and 2019, the industry invested three quarters of its cash flows into developing new fossil fuel resources. These days, the share is less than half, according to the IEA.