Exxon Mobil Billings Refinery sits in Billings, Mont.
Photo:
Matt Brown/Associated Press
Behold the irony. President Biden has done more to enrich Big Oil and its shareholders than
or any other White House occupant in decades. See how his Administration’s crusade to limit U.S. oil and gas production is reaping record profits for
Mobil and other fossil-fuel giants.
Exxon on Tuesday reported a record $55.7 billion annual profit last year, surpassing its $45 billion haul in 2008. This makes Exxon among the most profitable companies in American history. What a dramatic change of fortune. Two years ago, Exxon and other oil companies were bleeding cash as prices plunged early in the pandemic. Fossil-fuel opponents celebrated.
But as economies recovered, so did oil demand. Long-haul trucks and airplanes can’t run on solar power or batteries. Global production lagged, however, especially in the U.S. Some Organization of the Petroleum Exporting Countries members curtailed investment during the pandemic because they didn’t expect demand to rebound as quickly as it did.
At the same time, giants such as
and
steered more capital to renewable energy. As prices began to climb in 2021, U.S. producers faced investor pressure to restrain investment in new production because no one knew how long the good times would last, especially amid the political assault on fossil fuels and proclamations that the death of oil was nigh.
Exxon defied the crowd and thus profited inordinately from last year’s high oil prices. “We leaned in when others leaned out, bucking conventional wisdom,” CEO
Darren Woods
said Tuesday. Not that other giants aren’t enjoying healthy earnings too.
last week announced a record annual $36.5 billion profit and $75 billion stock buyback program.
Chevron’s announcement drew a testy and defensive response from the White House. The only thing getting in the way of companies increasing production “is their own decision to keep plowing windfall profits into the pockets of executives and shareholders instead of using them to boost supply,” a White House spokesperson said.
But Big Oil companies are merely benefiting from supply shortages and production constraints the Administration has helped to create. U.S. production remains about 900,000 barrels a day below the pre-pandemic peak, twice as much as Russian oil exports have declined since the Ukraine invasion. “We are underinvesting as an industry in this space,” Mr. Woods accurately explained.
Why, pray tell, is that? One reason is the Administration and European governments have told companies that their products will soon become obsolete. Another is the Administration’s regulatory fusillade against the industry. It has delayed lease sales, dragged its feet on permitting pipelines, and tightened renewable-fuel mandates that raise costs for refiners.
As a case in point, consider the White House’s proposed guidance this month that would require federal agencies to calculate indirect greenhouse gas emissions for fossil-fuel projects, including new oil and gas leases. Agencies would also have to analyze potential renewable alternatives, which would make it easier to block the projects.
Renewable projects would be exempt from this onerous GHG analysis even if the solar panels are made in China using coal power. Big Oil companies will survive the regulatory onslaught and may benefit financially if smaller rivals go under and prices continue rising as Chinese demand grows with the end of zero-Covid. Those who will pay for these Biden policies are American consumers.
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Appeared in the February 1, 2023, print edition.
