Major Western oil companies reported record profits in the second quarter alongside gas prices that have topped a national average of more than $5 a gallon.
ExxonMobil, Chevron and Shell posted a combined $46 billion in earnings for the second quarter, according to earnings statements from the three companies. Exxon reported $17.9 billion in earnings, Chevron said it earned $11.6 billion.
The London-based Shell said it earned $16.7 billion when the cost of supplies is factored in. Its adjusted earnings for the quarter, which exclude certain price changes and one-time expenses, was $11.5 billion.
ExxonMobil and Chevron's share prices are now just a few dollars short of their year-to-date highs, as the companies promised to increase stock buybacks and pay down debt, actions designed to reward shareholders.
At the same time, the companies say they plan to use their profits to build their energy supplies at a time when they face headwinds from the ongoing war in Ukraine.
“We more than doubled investment compared to last year to grow both traditional and new energy business lines,” Chevron CEO Mike Wirth said in a statement. “Chevron is increasing energy supplies to help meet the challenges facing global markets.”
The companies' profits have become a political flashpoint. Even before the second-quarter financial results came in, President Joe Biden warned last month: “We’re going to make sure everybody knows Exxon’s profits ... Exxon made more money than God this year.”
A growing group of progressive legislators are calling for a windfall profit tax on the companies, similar to the one recently introduced in the United Kingdom.
Yet those measures are unlikely to gain broad support. The Inflation Reduction Act currently being debated in Congress contains tax rebate provisions for investing in green energy, but also calls for increasing America's energy security by boosting fossil fuel supplies.
"The increased risk of geopolitical uncertainty demands that we turn our focus to increasing U.S. energy production and bringing good paying energy and manufacturing jobs back to America," U.S. Sen. Joe Manchin (D-W.V.), the bill's key supporter, said in a statement this week. "While this may seem like commonsense, this Administration’s current solution is to push forward more costly regulations resulting in less U.S. production while inexplicably asking other nations to pump more oil."
Oil industry analyst Andy Lipow said the increased earnings that the oil companies are seeing should be put in context.
'They’re still making less than Google or Apple," he told NBC News. "No one is complaining about $1,300 iPhones, but the difference is, you don’t see the price of an Apple iPhone on a corner store with 12-inch numbers," Lipow said, likening it to a gas price display.
And he said Americans should expect the current environment — big-money returns for oil companies alongside higher gas prices — to linger.
"Higher energy prices are here to stay," he said. "Gasoline prices are coming down — and we may even see the the national retail average fall to $4 gallon in October — but we’re not returning to $3 or $2.50 or even less, in a pandemic, when demand was down 20% or 30%. These companies are going to remain quite profitable."