$8.5 billion profit for BP as prices rise during the Russo-Ukrainian war

Suspension

LONDON – BP reported $8.5 billion in second-quarter profit on Tuesday, its highest level in 14 years, making it the latest oil giant to benefit from higher crude prices as Russia’s war in Ukraine roils global energy markets.

Just days ago, the two largest US oil companies – ExxonMobil and Chevron – reported that their profits nearly tripled in the second quarter, while London-based Shell and France’s TotalEnergies also reported impressive results. Western oil companies’ second-quarter earnings have now totaled more than $55 billion, marking a stunning turnaround from the early months of the coronavirus pandemic.

Sudden gains come Consumers around the world are feeling the pain of decades of high inflation and a particularly painful cost-of-living crisis at the gas pump. The price of crude oil rose above $120 a barrel in March and again in June before falling again, still 34 percent higher than last year. Average US national gas price jumped side by side, to over $5 a gallon for the first time, AAA mentionedalthough the prices are now lower.

President Biden warned the industry that he is considering all options to limit its profits if gas prices remain high. The president and other Democrats have been consistently criticizing the oil industry’s profits at a time when drivers struggle to cover the cost of filling a fill.

While Biden’s tools are limited — there isn’t enough support from Congress to move forward with his plan to introduce a windfall dividend tax — that could change if he declares a “climate emergency,” as the administration has said is possible. Energy analysts predict that if gas prices start to rise again, Biden may use his presidential powers to assert more government control over domestic oil and gas producers.

See also  US officials are leading urgent rescue talks for the First Republic

Oil executives have retracted criticism from the Biden administration, saying the only way to correct the imbalance between supply and demand in global oil markets is to pump more oil.

“I want to make it clear that Chevron shares your concerns about the high prices that Americans are experiencing,” Chevron CEO Mike Wirth told Biden. open letter. “And I assure you, Chevron is doing its part to help meet these challenges by increasing capital expenditures to $18 billion in 2022, more than 50% more than last year.”

Analysts also point out that the oil market is intensely cyclical. The industry struggled during the 2008-2009 financial crisis, again between 2014 and 2016, and more 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 collapse of COVID-related commodities was an epic disaster,” Molchanov said in an email.

Pump shock: why gas prices are so high

In a report, the company said BP’s second-quarter results, up from $6.2 billion in the first quarter, were driven by strong refining margins, “continued exceptional oil trading performance,” and higher fuel prices. statement. The increase in global demand and the war in Ukraine were major factors in the price hike, which directly increased the company’s profits.

“Today’s results show that BP continues to perform during the transition,” Bernard Looney, chief executive of Looney, said in a statement. “We do this by providing the oil and gas the world needs today – and at the same time, investing to accelerate the energy transition.”

See also  Nvidia announces technology to accelerate chip design at its Artificial Intelligence conference

As a result of the higher earnings, the company said it would boost its dividend by 10 percent, to 6,006 cents per common share, more than it had previously expected. “This increase reflects the underlying performance and cash generation of the business,” the company said.

BP said it expected oil and gas prices to remain elevated in the third quarter “due to the ongoing disruption to Russian supplies” and “low levels of spare capacity”. The geopolitical outlook has also led to shortfalls in European gas supplies that are “too dependent on Russian pipeline flows,” which is expected to keep prices high.

Germany is launching old coal plants, raising fears that climate targets will fade

Shell announced larger share buybacks totaling $6 billion, while Exxon said it distributed $7.6 billion to shareholders when earnings are included.

Patrick de Haan, head of petroleum analysis at GasBuddy, said major oil companies appear to be investing in increasing their supply. But he said their near-term focus appears to be shareholder value.

Exxon and Chevron make huge profits on the back of the oil price boom

President Biden accused the giant American oil companies of taking advantage of difficult conditions. speak At the Port of Los Angeles in June, he said, “Exxon made more money than God this year.” the company declined, warning His administration for its attempts to “criticize, and at times discredit, our industry” as oil companies deny accusations that their policies are making prices artificially high.

In May, the British government announced 25 percent unexpected tax on profits from oil and gas companies that can be used to help low-income families struggling with a Sharp rise in cost of living. we legislators I considered a similar tax, but it is unlikely to pass in the evenly divided Senate.

See also  US crude oil jumps to $125 a barrel, the highest in 13 years due to a possible Western ban on Russian oil

British legislator and opposition finance minister Rachel Reeves has criticized BP’s profits, Twitter: “People are worried about energy prices going up again in the fall, but again we’re seeing amazing profits for oil and gas producers.”

Left-wing politicians and advocacy groups in both the US and UK have called for additional taxes on oil companies’ windfall profits.

Greenpeace UK chirp “There is something particularly outrageous and cruel about gas companies like Shell and BP that are making record profits as consumers struggle to keep warm this winter.”

Representative Rosa de Lauro (Democrat) chirp “Monopolistic companies amplify their market power, harm families at the pump and increase inflation,” she later added, “Americans do not deserve to be manipulated at the pump.”

Leave a Reply

Your email address will not be published. Required fields are marked *