The huge results come a day after Europe-based Shell also reported record profits: The three companies, plus France’s TotalEnergies, combined earned nearly $51 billion last quarter, nearly double what they did during the same three months in 2021, According to Reuters.
The astonishing results are mostly related to the West’s efforts to punish Russia for the unprovoked attack on its neighbor by cutting off its energy sales. Crude oil prices, which plummeted in the early months of the coronavirus pandemic, have suddenly spiked, and are now 37 percent higher than they were a year ago. That’s still less than what markets ordered in June, when West Texas Intermediate crude, the US oil standard, rose more than $120 a barrel. Until Friday, West Texas Intermediate crude remained near $100 a barrel.
Energy companies have boomed while the rest of Wall Street has been hit hard this year. Vanguard’s Energy Index, an exchange-traded fund of oil majors, is up 37 percent year-over-year so far even as the broad S&P 500 index is down 14 percent. Exxon and Chevron shares rose 51 percent and 36 percent, respectively.
Consumers and businesses have felt the pinch of rising fuel prices amid high inflation for decades.
The average price of a gallon of gasoline in the United States exceeded $5 for the first time in June. On Friday, it was $4.26, according to AAA. The Bureau of Economic Analysis reported Friday that consumers’ gasoline bills rose about 49 percent that month, after rising 20 percent in May. Diesel fuel, which forms the basis of much of the US shipping system, has also risen, adding pressure on major retailers in a shaky economy.
President Biden, facing criticism from the right over his handling of inflation and the economy, called on Exxon to make “more money from God” in June. Tabukwhile appealing to it and Chevron to redouble their efforts to get more oil supplies in the market.
In late June, Chevron CEO Mike Wirth responded with a strongly worded letter blaming management for its attempts to “criticize, and at times discredit, our industry.”
He added that Chevron is “also concerned about the higher prices Americans are seeing,” while highlighting his companies’ capital expenditures recently.
Oil companies are pumping more to meet demand, with Exxon increasing its production of oil and gas in the Permian Basin by 130,000 barrels of oil equivalent per day compared to the first half of 2021. But the crude oil market continues to suffer from a severe imbalance in supply and demand, and industry insiders say that Providing new supplies online will take years.
“If you look at what it takes to bring in new investment to increase supply in the oil industry, you will find that it is a fairly long-term investment … three to five years is a reasonable time frame to think about bringing significant additional production into the mix,” said CEO Darren Woods. Exxon on CNBC on Friday.
Besides boosting production, the oil giants are also sending billions of dollars to Wall Street through share buybacks and dividends. Exxon reported that it distributed $7.6 billion to shareholders, including dividends, while Shell announced a $6 billion share buyback aimed at boosting its share price.
Exxon shares jumped 4.7 percent on Friday to close at $96.97, while Chevron shares jumped 8.9 percent to settle at $163.78. Shell shares rose 3.7% to $53.38.
The gains came as the rest of Wall Street wrapped up in July with a third straight winning session. The Dow Jones Industrial Average added 315.50 points, or 1 percent, to fall at 32,845.13. The S&P 500 Index jumped 1.4 percent to close at 4130.29, and the Nasdaq Index jumped 1.9 percent to close at 12,390.69.
Over the course of the week, Dow Jones rose 3 percent, Standard & Poor’s 4.3 percent and Nasdaq 4.7 percent.
For the month of July, the Dow Jones rose 6.7 percent, the Standard & Poor’s rose 9.1 percent, and the Nasdaq rose 12.4 percent. Those were the biggest monthly gains for all three indices since November 2020, according to MarketWatch.
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