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Exxon’s record $56 billion profit has renewed the White House’s outrage at oil companies

ExxonMobil raked in $55.7 billion in annual profits, shattering a 2008 record of $45 billion and setting a new goalpost for American and European fossil fuel companies.

Exxon CEO Darren Woods said the stellar annual profits came on the back of “a favorable market”—a combination of recovery in activity after covid and prices skyrocketing since Russia invaded Ukraine in February 2022—but credited the firm with taking advantage of the undersupplied market. “We leaned in when others leaned out,” he said.

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While Woods celebrated the result, the White House called it “outrageous.” The Biden administration has been calling on oil companies, which receive hundreds of billions of dollars in public subsidies, to reinvest their profits to increase oil production to alleviate supply constraints following Russia’s war in Ukraine and lower energy prices.

Those calls have largely been ignored as fossil fuel giants see their recent earnings as well deserved after two years of pandemic restrictions hurt demand and their bottom line. Just last week, Chevron posted a record $36.5 billion profit for 2022 and announced a share buyback program—a move the Biden administration criticized.

While Democrats have condemned excessive corporate profits, Republicans, who tend to be heavily funded by the oil and gas industry, have blamed Biden’s policies for keeping gas prices high. Gas prices in the US peaked in June and then started decreasing as Biden released 180 million barrels of crude from the country’s Strategic Petroleum Reserve over several months. Gas prices are currently back at the level they displayed this time last year, before Russia invaded Ukraine.

Charted: American consumers pay record amounts for gas

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Quotable: White House irked by Exxon’s record profit

“It’s outrageous that Exxon has posted a new record for Western oil company profits after the American people were forced to pay such high prices at the pump amidst [Russian president Vladimir] Putin’s invasion. The latest earnings reports make clear that oil companies have everything they need, including record profits and thousands of unused but approved permits, to increase production, but they’re instead choosing to plow those profits into padding the pockets of executives and shareholders while House Republicans manufacture excuse after excuse to shield them from any accountability.” White House spokesperson Abdullah Hasan

Exxon’s flourishing (again)

Back in 2013, Exxon was the world’s largest company. But in 2020, after the pandemic sent oil prices plummeting, it was among the energy companies plagued by massive losses. For the first time in decades, Exxon recorded an annual loss of $22 billion that year. The longest-tenured member of the Dow at 92 years, the oil major was embarrassingly ousted from the index in August 2020.

A little under two years later, though, Exxon has recovered. In June 2022, its stock was up over 150% since Dow Jones dropped it. Meanwhile, the company that replaced the oil giant on the index, Salesforce, was down 30%.

One big number: $190 billion

$190 billion: The estimated combined profit of oil majors Exxon, Chevron, BP, Shell and TotalEnergies for 2022, according to a Jan. 27 CNBC report citing Refinitiv analysts.

Should oil companies in the US pay a windfall tax?

Europe has imposed a 33% windfall tax on energy companies’ surplus profits. Britain is charging a 25% energy profits levy. California has been weighing something similar, and the US president has suggested putting one in place as well if companies don’t voluntarily repatriate profits.

The reception to such a tax won’t be without resistance. Exxon has sued to block the EU tax, which is set to cost the company an estimated $1.8 billion for 2022. “This tax will undermine investor confidence, discourage investment, and increase reliance on imported energy and fuel products,” the company said.

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