LONDON – BP reported a profit of $8.5 billion for its second quarter on Tuesday, its highest in 14 years, making it the latest oil giant to cash in on higher crude prices as Russia’s war in Ukraine disrupt global energy markets.
Just days earlier, the two biggest U.S. oil companies – ExxonMobil and Chevron – reported their profits had roughly tripled in the second quarter, while London-based Shell and France’s TotalEnergies also reported blockbuster results.
The total second-quarter profits for Western oil companies is now more than $55 billion, marking a stunning turnaround from the early months of the coronavirus pandemic.
The windfall comes as consumers around the world are feeling the pain of decades-high inflation and a cost-of-living crisis that’s particularly painful at the gas pump.
The price of crude oil surged above $120 per barrel in March and again in June before falling back, and it remains up 34% compared to a year ago.
The national average gas price in the United States jumped in tandem, to over $5 a gallon for the first time, AAA reported, although prices are now dropping.
President Joe Biden has warned the industry that he is considering all options to curb their profits if gas prices remain high.
The president and other Democrats have consistently railed against the oil industry’s earnings at a time when drivers are struggling to cover the cost of filling up.
While Biden’s tools are limited – there is not enough congressional support to advance his plan for a windfall profits tax – that could change should he declare a “climate emergency,” as the administration has said is possible.
Energy analysts predict that if gas prices start shooting up again, Biden could use his presidential powers to assert more government control over domestic oil and gas producers.
Oil executives have pushed back on the Biden administration’s criticisms, saying the only way to remedy the imbalance of supply and demand in global oil markets is to pump more oil.
“I want to be clear that Chevron shares your concerns over the higher prices that Americans are experiencing,” Chevron chief executive Mike Wirth told Biden in an open letter.
“And I assure you that Chevron is doing its part to help address these challenges by increasing capital expenditures to $18 billion in 2022, more than 50% higher than last year.”
Analysts also note that the oil market is intensely cyclical.
The industry suffered during the 2008-2009 financial crisis, again between 2014 and 2016, and most recently during the first two years of the coronavirus pandemic, says Pavel Molchanov of Raymond James investment bank.
“The industry is currently enjoying record levels of profitability, but two years ago the COVID-related commodity crash was an epic debacle,” Molchanov said in an email.
BP’s second-quarter results, up from $6.2 billion in the first quarter, were driven by strong refining margins, “continuing exceptional oil trading performance” and higher fuel prices, the company said in a statement.
Local journalism is essential.
Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are not tax deductible, but are predominately used to help meet the local financial requirements needed to receive national matching-grant funds.
Subscribe now to get breaking news alerts in your email inbox
Get breaking news delivered to your inbox as it happens.