Climate Change and Business Fossil Fuels Global Warming News International

Oil and Gas Companies Profit While Americans Pay High Gas Prices at the Pump

An oil derrick silhouetted against the rising sun

While gas prices remain high, the largest US oil and gas companies are profiting, according to Friends of the Earth, BailoutWatch, and Public Citizen. Over half (56 percent) of oil and gas executives responding to the Dallas Fed’s quarterly energy survey in march stated that publicly-traded companies are holding back production due to “investor pressure to maintain capital discipline… despite high oil prices.” 

Americans are paying more at the pump. The average gas prices increased by 29 percent, from $3.28 to $4.23 per gallon, during the first three months of 2022. “As the crisis in Ukraine drives oil and gas prices to record highs, ExxonMobil, BP America, Chevron, and Shell Oil Company are poised to reap even more windfall profit from fossil fuel,” stated the House Committee on Oversight and Reform

Disaster capitalism

The price for a West Texas Intermediate (WTI) barrel closed at $92.77 on the first day of the Russian invasion. Ten days later, it increased by more than 35 percent before falling below $100 over the next few weeks. However, some traders expect $200 a barrel later this year. While February 24, 2022 was a horrible day for Ukraine, the report points out, it was a great day to own oil company stock. Take the Texas driller EOG as an example. The company said it would give shareholders a bonus cash payout of $585 million through a special dividend. Occidental and Ovintiv announced double-digit dividend increases. 

Coterra Energy, a new company created by the merger of shale drillers Cabot Oil and Cimarex, is another example of the invasion of Ukraine being good for oil and gas companies. The CEO of Coterra said to investors, “Public policymakers in the United States and abroad are reexamining their energy policies in a manner that favors natural gas demand. We hope these good times last, but Coterra is prepared for whatever the future may bring.” In other words, Coterra is prepared to reap the dividends of the invasion while Americans pay exorbitant gas prices.

In the first two months of 2022, the boards of seven oil and gas companies authorized the repurchase of $24.35 billion in stock, which is a 15 percent increase overall of the buybacks authorized in 2021. Six of those decisions occurred in February 2022, after the Russian invasion of Ukraine raised stock prices. More than half of the oil and gas companies boosted their dividends in January and February. Nine of the 11 companies raised their dividends by more than 15 percent and four by more than 40 percent. Six companies began paying additional dividends, and in 2022, those companies started paying out an initial $3 billion in special windfall dividends.

“This is a master class in war profiteering. Oil and gas companies are feeding off humanitarian disaster and consumer suffering in order to reward Wall Street,” said Lukas Ross, climate and energy program manager at Friends of the Earth. “Oil companies drove us into a climate crisis and are now price-gouging us to extinction. Congress and President Biden must take action by passing a windfall profits tax to rein in Big Oil’s cash grab.” 

Profiting off the misery in Ukraine

Rep. Carolyn B. Maloney, the Chairwoman of the Committee on Oversight and Reform, and Rep. Ro Khanna, the Chairman of the Subcommittee on Environment, sent a letter to oil and gas company executives at ExxonMobil, BP America, Chevron, and Shell Oil Company. “As Vladimir Putin’s illegal war against Ukraine is raising gas prices and hurting Americans at the pump, fossil fuel companies are taking advantage of the crisis by raking in record profits and spending billions of dollars to enrich their executives and investors,” the Chairs wrote. 

The letter cites the Committee’s findings that as profits increased last year, “Exxon, Chevron, BP, and Shell spent more than $44 billion to enrich investors with stock buybacks and dividends.” The four companies “promised to funnel at least $32 billion more to your investors, while committing less than half that amount to urgently needed lower-carbon investments.”

“Big Oil must immediately stop profiteering off the crisis in Ukraine,” the letter proclaimed. During an April 6 hearing by the Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce, Chairman Frank Pallone, Jr. stated that “Big Oil is choosing to keep supply low, prices high, and their pockets lined with the hard-earned dollars of struggling American consumers.”

 

Photo by WORKSITE Ltd. on Unsplash

JOIN OUR NEWSLETTER
I agree to have my personal information transfered to MailChimp ( more information )
Get the latest news and commentary on climate, energy and sustainability delivered every week right to your inbox
We hate spam. Your email address will not be sold or shared with anyone else.

Similar Posts

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.