$30 billion gains renew clash between Big Oil and White House

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The two largest U.S. oil and gas companies reported combined profits of over $30 billion on Friday, sparking another round of debate over domestic energy producers’ actions.

President Joe Biden and Exxon Mobil Corp. engaged in a long-distance verbal battle over third-quarter results while a congressional Democrat announced a new plan to block US gasoline exports during a period of high domestic prices.

Exxon and Chevron Corp. said they are benefiting from long-term investments they have continued in the depths of the Covid-19 pandemic. Industry has argued that the best way for Biden’s administration to help American consumers is to encourage more oil and gas production in the United States. At the same time, companies spend billions of dollars on dividends and share buybacks to reward their investors.

“There have been discussions in the US about our industry giving back some of our profits directly to the American people,” Exxon Mobil CEO Darren Woods said in prepared remarks on Friday. “In fact, that’s exactly what we do in the form of our quarterly dividend.”

Woods also argued against unexpected profit taxes imposed by the European Union on certain energy companies.

The White House responded via Biden’s official Twitter account, “I can’t believe I have to say this, but giving profits to shareholders is not the same as lowering prices for American families.”

Exxon Mobil made $19.7 billion, its highest quarterly profit ever, and Chevron made $11.2 billion, the companies said. Overseas, French oil producer TotalEnergies SE on Thursday reported quarterly profit of $6.6 billion and Shell PLC reported $8.3 billion for the quarter.

Companies have benefited as Russia’s war in Ukraine and political maneuvers by Saudi Arabia and other energy-producing countries have pushed up oil and gas prices. Crude oil began falling last quarter and gasoline prices fell from record highs, but companies continued to benefit as the price of natural gas remained elevated.

The industry at large has also improved its bottom line through cost-cutting, and many companies have failed to replace thousands of employees laid off when oil prices plummeted in the wake of the Covid-19 pandemic in 2020. Exxon Mobil, for example, said Friday it reduced costs by $6.4 billion compared to 2019.

Gasoline and diesel prices also rose as some US refineries shut down during the pandemic. Companies achieved record margins on every barrel they processed into gasoline and diesel (energy wire5th of May).

At the same time, analysts and the oil companies themselves have said the world needs to invest more in conventional oil and gas production as the global economy recovers from the pandemic.

“We’re in a commodities business that goes through cycles,” Chevron CEO Mike Wirth said in an interview with Bloomberg TV. “There are tough times, as we saw two years ago, where we had huge losses.”

While a cycle can also produce “strong returns,” Wirth said, the company needs to invest in good times and bad. He said introducing a new tax for the industry would not be productive.

The Biden administration has tried to depress oil prices by releasing oil from the Strategic Petroleum Reserve, but experts said any relief was limited (energy wireOct. 24).

Rep. Ro Khanna (D-California) introduced a bill on Friday that would ban the export of American-made gasoline while allowing the export of diesel to Europe and other regions (Green cable, Oct. 28). The bill does not deal with oil exports.

The Biden administration has not endorsed the idea of ​​a US energy export ban, and oil companies have opposed the idea.

In his interview with Bloomberg, Wirth hinted that a ban would have “unintended consequences”. But he said the government could help consumers by waiving refining specifications for gasoline and diesel – and the Jones Act, which bans foreign-owned ships from transporting cargo between US ports.

Wirth and Exxon Mobil’s Woods also commended some of the provisions of the recently enacted Anti-Inflation Act. The law, signed into law by Biden in August, provides billions of dollars in tax credits for companies that capture carbon emissions, produce biofuels and develop low-emission forms of hydrogen.

“This law is a good example of constructive policy towards the energy transition,” Woods said in prepared remarks.

The oil industry hinted that its profits could soften. Chevron sees a more than 10 percent increase in labor and material costs in the Permian Basin, a key source of domestic oil production.

That trend, Wirth told analysts on a conference call, is a constraint on the pace of “industry activity and ramping up next year.”

Reporter Carlos Anchondo contributed.

This story also appears in climate wire.

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