Oil Giants’ Huge Profits Renew Calls For Windfall Taxes – Cryptovibes.com – Daily Cryptocurrency and FX News

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Summary

  • Sector boosted by soaring oil and gas prices
  • Four of the five largest global oil companies have now reported
  • S. President Biden criticizes energy companies

Global energy giants including Chevron Corp (CVX.N) and Exxon Mobil Corp (XOM.N) reported another round of hefty quarterly profits, benefiting from rising fuel and natural gas prices that have pushed up inflation around the world and prompted fresh calls to further tax the sector.

Four of the five biggest global oil companies have now posted results, combining for almost $50 billion in net income, boosted by tight global markets and disruption following Russia’s war in Ukraine.

The total size of the profits has renewed calls from politicians and consumer groups to impose additional taxes on the firms to obtain funds to offset the squeeze on businesses, households, and the wider economy from surging energy costs. They have also accused large oil companies of not doing enough to increase production to offset surging fuel and heating costs.

Pierre Breber Chevron’s Chief Financial Officer warned in an interview with Reuters that “taxing production will just reduce it.”

The firm posted its second-highest profit of $11.2 billion. However, the firm’s global production has fallen so far this year compared to a year ago, and other U.S. oil companies indicated that output in the top-producing U.S. shale region is declining already.

“If you raise the costs on energy producers, it will decrease investment so that goes against the intent of increasing suppliers and making energy more affordable.”

U.S. President Joe Biden, who earlier in 2022 said Exxon was earning “more money than God”, told oil companies in October that they were not doing enough to curtail energy costs. Mere hours after Shell (SHEL.L) posted a quarterly profit of $9.45 billion and increased its dividend by 15% on Thursday, Biden said the company was squandering its profits.

On Friday, he wrote on Twitter in response to a comment from Exxon’s CEO that “giving profits to shareholders is not the same as bringing prices down for American families.”

In the UK, the president of the COP26 climate summit Alok Sharma said on Friday that Prime Minister Rishi Sunak’s government should consider extending a windfall tax on gas and oil companies. Sharma said:

“These are excessive profits, and they have to be treated in the appropriate way when it comes to taxation.”

Shell CEO Ben Van Beurden has said the energy industry “should be prepared and accept” that it will encounter higher taxes to help grappling parts of society. Shell made more than $9 billion in the third quarter, putting it on track to beat its record annual profit of $31 billion reached in 2008.

The Windfall

Exxon Mobil, the biggest U.S. major, posted around $20 billion in net income in the third quarter, surpassing expectations and beating its previous record reached just three months earlier.

Exxon topped the five oil majors in overall revenue, almost doubling its competitors Shell and TotalEnergies (TTEF.PA) in the quarter. Exxon’s shares fell behind those companies’ stocks for several years, but have recovered this year even as it has not made the same commitment as its European peers to jack up spending in renewables. BP Plc (BP.L), the fifth major, posts results next week.

 ExxonMobil logo and natural gas pipeline

Exxon CEO Darren Woods said:

“Where others pulled back in the face of uncertainty and a historic slowdown, retreating and retrenching, this company moved forward, continuing to invest.”

Shares of the five majors have all registered a total return of at least 29% in 2022. Exxon takes the lead with an 86% rise, while the broad-market S&P 500’s (.SPX) total return is minus 19% on the year, according to Refinitiv Eikon data.

European governments have raced to fill gas storage after Russia stopped most of its natural gas supplies to the continent, its main customer.

On Friday, Norway’s Equinor also broke fresh ground helped by the all-time high in European gas prices, and Italy’s Eni (ENI.MI) almost tripled its profit from the previous year, exceeding the consensus with earnings of 3.73 billion euros ($3.72 billion). France’s TotalEnergies posted a record profit of $10 billion on Thursday.

Equinor Chief Executive Anders Opedal said in a statement:

“The Russian war in Ukraine has changed the energy markets, reduced energy availability, and increased prices.”



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