The United States' largest oil companies made more money in 2022 than ever before, eclipsing windfalls of earlier years and making themselves a potential target for driver frustration as prices at the pump remain elevated.
Exxon Mobil on Tuesday reported an annual profit of $55.7 billion for 2022, smashing its 2008 record of $45 billion. The news comes just days after another American oil behemoth, Chevron, drew the ire of the White House when the company also announced its biggest windfall ever, $36.5 billion.
The record profits, industry analysts say, are fueled by a variety of factors that drove up demand last year, largely connected to Russia's war in Ukraine. Sanctions levied on Russian fuel because of its invasion threw the global market out of balance, leaving energy supplies so tight that prices shot up for crude oil, refined products such as gasoline and diesel, and natural gas.
"All three dials on the slot machine lined up in a way they rarely do," said Kevin Book, managing director at ClearView Energy Partners, a research firm.
The national average price for a gallon of regular gasoline exceeded $5 at its height in mid-2022 as available shipments of fuel dropped and refiners struggled to replace Russian products. The U.S. government tried to blunt the cost surge by releasing millions of barrels of oil from its Strategic Petroleum Reserve.
On Tuesday, the national average for a gallon of regular gas was $3.51, down from a peak of $5.02 in June, according to AAA. The national average was $3.37 a year ago. In Arkansas, motorists were paying an average $3.17 Tuesday, down from a peak of $4.54 in June. Arkansans were paying $3.02 a year ago, according to AAA.
Record profits being posted now are not linked to a recent upswing in fuel prices, which is expected to continue in the coming months. But the record profits are giving drivers and politicians plenty to vent about.
"These profits are coming right out of your pockets," Democratic California Gov. Gavin Newsom posted on Twitter. "It's time for a gas price gouging penalty to keep greedy oil companies in check."
The oil companies are largely ignoring the attacks, with the political fallout not mentioned in Chevron's earnings call Friday morning. Industry officials have long said the attacks on the profits are misplaced, as oil prices are set by global markets that no private business can control.
Gas prices have been increasing for five consecutive weeks, according to the price-tracking company GasBuddy, which attributes the rise partly to a December cold snap that knocked refineries offline. Also, some refining facilities have scheduled maintenance that had been put off last spring in response to the surge in prices.
"There appears to be little good news on the gas price front, with prices unlikely to turn around anytime soon," said Patrick De Haan, head of petroleum analysis at GasBuddy. Adding to the pressure on prices are China reopening its economy, which is expected to increase energy demand, and a European Union ban on Russian diesel and other crude products that kicks in Sunday.
The White House has few levers left to keep prices down. President Joe Biden has already depleted a substantial portion of the strategic reserve, and the chances of enacting windfall taxes on oil profits are slim, now that Republicans control the House of Representatives.
The House on Friday passed a bill that would restrict the Biden administration and others from further drawing down the nation's emergency reserve unless the federal government expands available leases for oil and gas drilling on federal lands every time the reserve is tapped. But the measure is unlikely to advance in the Democratic-controlled Senate.
One thing the White House does have is a megaphone, which it is using to try to shame oil companies and steer motorist frustration their way. That includes taking aim at Chevron's decision to launch a $75 billion stock buyback for shareholders, a move that will fatten returns for investors.
"Companies clearly have everything they need -- record profits and thousands of approved permits -- to increase production," said a statement from Abdullah Hasan, a White House assistant press secretary. "The only thing getting in the way is their own decision to keep plowing windfall profits into the pockets of executives and shareholders instead of using them to boost supply."