Shell adds to oil industry’s record profits, with $41.

6 billion
Big oil companies continued to smash their profit records Thursday; with Shell reporting it
made $41.6 billion in 2022. It is the latest in a procession of earnings reports from an industry
enjoying massive windfalls while ordinary drivers strain to afford high prices at the pump.

In the case of Shell, the profit was more than $10 billion higher than in the company’s last
record year, 2008. Others in the industry also made more money in 2022 than ever before,
making themselves a potential target for driver frustration as prices at the pump rise.

ExxonMobil and Chevron drew the ire of the White House this week when the companies
announced their biggest profits ever, $55.7 billion and $36.5 billion, respectively, for the year.

The eye-popping numbers, industry analysts say, were fueled by a variety of factors, largely
connected to the war in Ukraine, that drove prices up last year. The sanctions levied on Russian
fuel because of the invasion threw the global market out of balance, leaving the supply of
energy so tight that prices for crude oil, refined products such as gasoline and diesel, and
natural gas all shot up at once.

“All three dials on the slot machine lined up in a way they rarely do,” said Kevin Book, the
managing director at ClearView Energy Partners, a research firm. The national average price for
a gallon of regular gasoline exceeded $5 at its height in 2022, as available shipments of fuel
dropped and refiners struggled to replace Russian products, while the U.S. government tried to
blunt the cost surge by releasing millions of barrels of oil from its Strategic Petroleum Reserve.

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The profits being posted now are not linked to the current upward swing in gasoline prices,
with the average cost of a gallon of regular back up to $3.50, according to AAA, and likely to
continue rising in the coming months. But they are giving drivers and politicians much to vent
about.
The oil companies are largely ignoring the attacks, with the political fallout not mentioned in
Chevron’s earnings call Friday morning. Industry officials have long said the attacks on the
profits are misplaced, as oil prices are set by global markets that they say no private business
can control. They warn that the windfall profit taxes that Democrats champion would backfire
by discouraging companies from investing in production.

Prominent Democrats have argued that oil companies can easily afford to boost production.

“The only thing stopping Big Oil from increasing production is their decision to pay shareholders
billions instead of reinvesting profits,” President Biden tweeted Tuesday night. “Instead of
demanding accountability, Republican officials are blaming us. I’m doing my part to lower
prices, it’s time Big Oil did theirs.”

The White House had earlier expressed outrage at Chevron’s decision to launch a $75 billion
stock buyback, a move that will fatten returns for investors.

New windfall profit taxes in some European nations undermine energy stability, ExxonMobil
CEO Darren Woods said Tuesday. “My sense is that there will be a lot of unintended negative
consequences that come from this,” he said. “And as that manifests itself, a lot less appetite for
doing this.”

Gas prices have increased for five consecutive weeks, according to the price-tracking company
GasBuddy. It attributes the trend partly to a December cold snap that knocked some refineries
offline. Also, some refining facilities have scheduled maintenance that had been put off last
spring in response to the surge in prices at that time.

“There appears to be little good news on the gas price front, with prices unlikely to turn around
anytime soon,” said Patrick De Haan, the head of petroleum analysis at GasBuddy. Adding to
the pressure on prices are China’s reopening of its economy, which is expected to increase
energy demand, and a European Union ban on Russian gasoline and diesel that takes effect Feb.
5.

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The White House has few levers left to keep prices down. It has used a substantial portion of
the strategic reserve, and the chances of windfall taxes on oil profits are slim, now that
Republicans control the House.

The House on Friday passed a bill that would prevent the administration from further drawing
down the nation’s emergency reserve unless the federal government expanded available leases
for oil and gas drilling on federal lands every time the reserve was tapped. The measure is
unlikely to advance in the Democratic-controlled Senate.