On Friday, the White House renewed attacks on the oil sector, accusing them of neglecting to invest in capacity so they can just hand profits to investors, following Chevron’s announcement its annual profits increased 100% in 2022.
Chevron’s profits for 2022 came in at $36.5 billion, over twice what the company made in 2021. Industry analysts say it is the first such report of many to come, as the energy supply sector begins to report the results from the banner year that was 2022.
Earlier in the week, Chevron announced it would be tripling its expenditures on share repurchases to $75 billion over 5 years. It is expected other oil companies will do the same.
White House spokesperson Abdullah Hasan said in response, “Companies clearly have everything they need – record profits and thousands of approved permits – to increase production. The only thing getting in the way is their own decision to keep plowing windfall profits into the pockets of executives and shareholders instead of using them to boost supply.”
As demand for fuel dropped during the Covid crisis, Congress passed massive tax breaks that offered retroactive relief to the oil industry to support it. Once Russia’s invasion of Ukraine caused oil prices to skyrocket, the governments of Europe imposed windfall taxes on their nation’s oil companies, however in the United States, there is no such urge among officials.
Meanwhile, analysts are forecasting that Chevron and Exxon Mobil, the two biggest oil producers in the nation, will combined, post annual profits of nearly $100 billion.
The White House has long been assailing the oil industry for not doing enough to alleviate the high prices of energy, and instead using their profits to funnel higher dividends to investors or pay off debts, which will allow them to increase profitability. Several times last year President Joe Biden called on oil companies to increase production, however his calls were for the most part, ignored.
For their part, oil companies point to previous periods of high oil prices, when they invested heavily in production, only to see prices fall, before the increased production came online. At that point they were forced to shutter the new production to cut operating costs as profits sank due to the lower prices. Now, instead of investing in increased production which will not be operational until prices drop and it needs to be decommissioned, they are simply running the company to maximize profitability, and rewarding shareholders with profits they are entitled to as investors in the company.
After trailing the broader stock market for years, the energy sector was one of the most profitable sectors in the S&P 500 index last year.
