Unprecedented Profit for Major Oil Drillers as Prices Soared
OIn the midst of Americans struggling to afford gasoline and food, il businesses made record profits in recent months.
Exxon Mobil reported a staggering $17.85billion profit in the second quarter, while Chevron posted a record of $11.62billion. The sky-high profits come one day after the U.K.’s Shell shattered its own profit record.
Rising energy prices are causing panic among consumers, and have become a hot political topic. Last month, President Joe Biden said that “Exxon made more money than God this year. ”
Consumers are faced with high fuel costs not only at their pumps, but also in delivery, which drives up the price of everything, including toilet paper and apples.
Already inflation has a significant impact on where Americans live and the food they eat. It’s also changing the way they consume energy.
Andrew Gross, a spokesperson for AAA, stated that two thirds of Americans had changed their driving habits. According to him, only 2% of those polled by AAA said that they have purchased an electric car since March.
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“They have really altered their lifestyles to cope with these high prices,” Gross said.
Exxon, which is based in Irving Texas, saw its oil production rise as the crude price soared to over $100 per barrel. Exxon revenues soared from $67.74 to $115.68billion in the last quarter.
Natural gas and liquefied natural gas (LNG) prices are also elevated due to Russia’s invasion of Ukraine and ensuing sanctions against Russia, a major supplier of natural gas. Many European countries are looking for alternative sources to Russian natural gases and have been competing with each other for huge quantities of LNG. The result is a rise in natural gas prices globally as well in the U.S.
Investors have enjoyed rising prices, which has been good news for executives in the energy sector who get a large share of compensation via company shares. Exxon earned $4.21 per Share, surpassing analyst expectations at $4.02 Per Share, according to Factset polled analysts. Chevron’s share price was $5.95, which is higher than analyst expectations at $5.16.
Exxon Mobil Corp. shares rose by 4% Friday morning, while Chevron’s stock went up by 8%
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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, growing supply will not happen overnight,” said Woods in a conference call Friday.
Due to fewer U.S. oil refineries being operational than they were before the pandemic in 2011, gasoline prices rose quickly in this quarter.
Exxon intends to expand its Beaumont Refinery in order to boost refining capacities by approximately 250,000 barrels per hour during the first quarter (2023). That represents the industry’s largest single capacity addition in the U.S. since 2012, the company said.
To alleviate Europe’s energy crisis, Exxon sees potential for fracking and unconventional gas in Germany, and “there’s an opportunity where certainly ExxonMobil could play a key role,” Woods said.
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Exxon plans to expand its LNG exports to Europe. Golden Pass is a new LNG export terminal in Port Arthur, Texas that will double the LNG exports to Europe. It will be operational in 2024.
“Bringing more LNG supplies to help offset some of the Russian gas going into Europe will be another really critical step forward in diversification of supplies for Europe,” Woods said.
Scientists and residents living close to Gulf Coast LNG Export facilities are warning that the expansion of fossil fuel infrastructure may lead to more disasters from climate change.
Exxon plans to double the oil-equivalent production of the Permian Basin this year, compared with 2021, and eliminate routine flaring by the Permian at the end the year.
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