Comes as windfall Consumers around the world are feeling the pain of decades of high inflation and a cost-of-living crisis, which is especially painful at the gas pump. Crude oil prices rose above $120 a barrel in March and fell again in June, and are 34 percent higher than a year ago. The national average gas price in the United States is above $5 a gallon for the first time, AAA reportedAlthough the prices have come down now.
President Biden has warned the industry that if gas prices remain high, it will consider all options to curb its profits. The president and other Democrats have continued to rail against oil industry revenue at a time when drivers struggle to cover the cost of filling up.
While Biden’s tools are limited — he doesn’t have enough congressional support to push through his proposed tax on profits — the administration has said it’s possible if he declares a “climate emergency.” Energy analysts predict that if gas prices start to rise again, Biden could use his presidential powers to ensure more government control over domestic oil and gas producers.
Oil executives have pushed back against criticism of the Biden administration, saying the only way to correct the imbalance between supply and demand in global oil markets is to pump more oil.
“I want to be clear that Chevron shares your concerns about the high prices Americans are experiencing,” Chevron Chief Executive Mike Wirth told Biden. An open letter. “I can assure you that Chevron is doing its part to meet these challenges by increasing capital spending to $18 billion by 2022, a 50% increase over last year.”
Analysts also note that the oil market is highly cyclical. The industry suffered during the 2008-2009 financial crisis, again between 2014 and 2016, and most recently in the first two years of the coronavirus pandemic, said Pavel Molchanov of Raymond James investment bank.
“The industry is currently enjoying record profits, but the Covid-related commodity crash two years ago was an epic failure,” Molchanov said in an email.
BP’s second-quarter results, up from $6.2 billion in the first quarter, were driven by strong refining margins, “continued exceptional oil trading performance” and higher fuel prices, the company said. Report. The surge in global demand and the war in Ukraine are key to the price hike, which directly increases the company’s profits.
“Today’s results show that BP continues to operate in a time of change,” CEO Bernard Looney said in a statement. “We’re doing this by providing the oil and gas the world needs today — while at the same time investing to accelerate the energy transition.”
As a result of the higher profit, the company said it will raise dividend payments by 10 percent, to 6.006 cents per ordinary share, higher than previously expected. “This increase reflects the underlying performance and cash generation of the business,” the company said.
BP, formerly British Petroleum, expects oil and gas prices to remain higher in the third quarter due to “continued disruptions to Russian supplies” and “dwindling spare capacity”. The geopolitical outlook has led to a shortage of European gas supplies, which are “heavily dependent on Russian pipelines”, which is expected to keep prices “high”.
Shell announced even bigger share buybacks of $6 billion, while Exxon announced it distributed $7.6 billion to shareholders when dividends were included.
Patrick De Haan, head of petroleum analysis at GasBuddy, says major oil companies seem to be investing in increasing their supply. But lately, their focus seems to be on shareholder value, he said.
Biden has accused US oil companies of taking advantage of the tight situation. will speak He said at the Port of Los Angeles in June: “Exxon made more money than God this year.” Company pushed back, Advising His administration tries to “criticize and sometimes denigrate our industry.” Oil companies deny allegations that their policies artificially raise prices.
In May, the British government announced 25 percent sudden tax In the profits of oil and gas companies – revenue used to help low-income families A sharp rise in the cost of living. to us Legislators A similar tax has been considered, but is unlikely to pass in an evenly divided Senate.
British lawmaker and opposition finance minister Rachel Reeves criticized BP’s profits, Tweeting: “People are worried about energy prices going up again in the fall, but we’re seeing eye-popping profits again for oil and gas producers.”
Left-wing politicians and advocacy groups in both the US and Britain called for additional taxes on oil companies’ windfall profits.
Greenpeace UK He tweeted that“There is something particularly obscene and cruel about gas companies like Shell and BP making record profits while consumers struggle to stay warm this winter.”
Rep. Rosa DeLauro (D-Conn.) He wrote on Twitter: “Corporate monopolies are abusing their market power, hurting households at the pump and fueling inflation. … Americans don’t deserve to see price increases at the pump.