In the past weeks oil companies released their 2nd Quarter earnings (April-June), as they are required to do as public companies. Their statements were wildly at odds with what the story they’ve been telling the media over the same period of time.
When Russia started its immoral and illegal invasion of Ukraine and sanctions were applied to Russian oil exports, the Biden administration told us that they expected oil prices to rise. Sanctions reduced the amount of oil supplies globally. With less supply, oil and gas prices did rise.
With the administration statement that oil prices would likely rise as a cost of defending democracy in Ukraine, the oil companies saw that as a green light to hike prices and pad their profit margins.
In the first three months of the year Exxon earnings (profits) rose more than 300%. Chevron and Shell also reported record profits. Their profit margins were “well above the 10 year average”.
During this same time, spokespersons for the industry and their GOP friends, all insisted the higher prices were not due to their actions. They said they couldn't increase capacity - that it was all due to crushing over-regulation by left wing Democrats. The reality of their quarterly statements show these to be fabrications and outright lies.
Exxon increased their spending on new well development in the Permian basin (west Texas) by 800% compared to 2021. They did this while simultaneously telling the media that regulations prevented them from doing exactly that.
Oil company product sales did not increase by 300% but profits did. They took advantage of the expected rise in world oil pricing to pad their profit margins at the expense of consumers. On the standard news outlets, they claimed that they don’t control prices, it is all just market forces. On the financial news stations, they brag about “pricing power” (their ability to increase prices).
Are the oil companies the sole cause for higher gas prices? No, as noted above, some of the increase has been due to the impact of Russian oil being sanctioned. But the oil companies made it worse during the April to June timeframe. Here in early August gas prices have dropped more than 20% from just 8 weeks ago. Will they stay there? Maybe! Progress in Ukraine may help. Most oil refineries in the US are along the Texas/Louisiana coast and therefore are prone to shut down due to hurricanes and tropical storms. So a severe storm could disrupt supplies and cause prices to rise temporarily.
Global warming has raised temperatures of the waters in the Caribbean. That temperature rise will make any storms stronger and more destructive. Hopefully Americans will wake to the reality of this vicious cycle and stop believing the oil industry spin.