Unprecedented profit for major oil drillers as prices soared

NEW YORK (AP) – Oil companies have made record profits in recent months at a time when Americans were struggling to pay for gasoline, food and other basic necessities.

On Friday, Exxon Mobil posted an unprecedented profit of $ 17.85 billion for the second quarter and Chevron made a record $ 11.62 billion. The skyrocketing profits come a day after UK Shell broke its profit record.

The surge in energy prices has shocked consumers and has become a political sticking point. Last month, President Joe Biden said that “Exxon has made more money than God this year.

Consumers are facing high fuel prices not just at the pump, but soaring energy prices are being incorporated into delivery costs, which is driving up the cost of everything. from apples to toilet paper.

Record profits have marked a dramatic turnaround since the early days of the COVID-19 pandemic, when cities were shut down and fuel demand plummeted. There have been numerous bankruptcies and thousands of layoffs.

The industry has gone through boom and bust cycles for a long time. But due to the ongoing war Russia has waged against Ukraine, which has led to less oil and gas on the Russian market, as well as other global supply constraints, high prices may persist for some time.

“It’s devastating,” said Mark Wolfe, executive director of the National Energy Assistance Directors Association, who added that high energy prices hit low-income families and frontline workers the hardest. “You live on a tight budget and that’s an extra $ 40 to $ 50 a week.”

Wolfe wants the federal government to tax energy companies and “redistribute some of those profits to struggling families.”

Inflation is already changing where Americans go and what they eat. The way they consume energy is also changing.

Two-thirds of Americans have changed their driving habits and lifestyle, with the vast majority choosing to drive less or combine errands, AAA spokesman Andrew Gross said. Among AAA respondents, 2% said they have purchased an electric vehicle since March, they said.

“They really changed their lifestyle to cope with these high prices,” Gross said.

Exxon, based in Irving, Texas, increased its oil and gas production as crude oil prices hovered above $ 100 a barrel. Exxon’s revenues skyrocketed to $ 115.68 billion, up from $ 67.74 billion in the same quarter last year.

Prices for natural gas and liquefied natural gas (LNG) are also high due to the Russian invasion of Ukraine and subsequent sanctions against Russia, a major supplier of natural gas. Many European nations have been looking for alternatives to Russian natural gas and have been competing for boat loads of LNG, causing natural gas prices to rise both globally and in the U.S. Inflation in Europe has also increased.including rising energy costs.

The price increase has been a boon to investors, including energy executives who receive a large share of compensation through the company’s stock. Exxon earned $ 4.21 per share, exceeding analyst expectations of $ 4.02 per share, according to analysts interviewed by Factset. Chevron earned $ 5.95 per share, exceeding analysts’ expectations of $ 5.16 per share.

Shares of Exxon Mobil Corp. rose 4% at the opening bell on Friday and Chevron was up 8%

Exxon CEO Darren Woods attributed the company’s success to its investments in oil and gas fields in Guyana and the Permian Basin, as well as its investments in liquefied natural gas, which has been in high demand globally.

“Given the long investment cycle times, the growing supply will not happen overnight,” Woods said in a conference call on Friday.

Gasoline prices rose particularly rapidly during the quarter, due to limited global supply, the high cost of oil, and because there are fewer refineries in the United States than before the pandemic.

Exxon plans to increase refining capacity by approximately 250,000 barrels per day in the first quarter of 2023 by expanding its Beaumont refinery. This represents the industry’s largest single-capacity addition in the US since 2012, the company said.

To alleviate the energy crisis in Europe, Exxon sees the potential for fracking and unconventional gas in Germany, and “there is an opportunity where surely ExxonMobil could play a key role,” Woods said.

Exxon also plans to increase its LNG exports to Europe. Golden Pass, its LNG export facility under construction in Port Arthur, Texas, will increase LNG exports from the Gulf Coast by 20% when it starts up in 2024, he said.

“Bringing more supplies of LNG to help offset some of the Russian gas entering Europe will be another very critical step in diversifying supplies for Europe,” Woods said.

Climate scientists and residents living near Gulf Coast LNG export facilities warn that expanding fossil fuel infrastructure could exacerbate climate change disasters.

Exxon plans to increase oil-equivalent production in the Permian basin by 25% this year compared to 2021 and to eliminate routine flaring in the Permian by the end of the year.

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