Status: 01/31/2023 3:12 p.m
Oil company profits have exploded in 2022. The US oil giant Exxon alone made a profit of 56 billion dollars last year. In times of high fuel and heating costs, however, the record profits are not well received everywhere.
While many sectors of the economy and companies had to make heavy cuts in 2022 in the face of inflation concerns and rising interest rates, Exxon and most companies in the oil industry did brilliantly. Thanks to sharply increased oil prices, ExxonMobil earned more than ever last year: The largest US oil multinational today announced a profit of 55.7 billion dollars for the past year.
The company thus increased its net income by around 140 percent compared to the previous year. Sales increased by around 45 percent to $413.7 billion. In the final quarter, revenues rose by a good twelve percent to $95.4 billion.
$200 billion profit in 2022?
With its adjusted annual profit of even 59 billion dollars, Exxon set a new record for western oil companies. Experts expect the multinationals to post annual profits of almost $200 billion in 2022 thanks to high prices after the Russian invasion of Ukraine and brisk demand.
Exxon CEO Darren Woods admitted that the strong quarterly and annual figures “clearly benefited from the favorable market environment”. However, one reason is that Exxon was willing to invest before and during the pandemic.
Prices on the oil and gas market rose sharply, which was also due to the temporarily significant shortage of supply due to Russia’s war of aggression against Ukraine. In times of high fuel and heating costs, however, the record profits are not well received everywhere.
Exxon sues over profit tax
The bubbling revenue should therefore further fuel the debate about an excess profit tax. Exxon CFO Kathryn Mikells doesn’t think much of such a tax. Excess profit taxes would ensure that the industry puts less money into developing new gas and oil fields, Mikells said. This levy is the result of “bad policies.” Exxon has already filed a lawsuit against the EU over the new tax, which cost the US giant around $1.3 billion in the fourth quarter.
Only on Friday did the US government criticize companies in the industry that invested their profits in distributions to their shareholders – and not in new energy projects.
Illegal price gouging in the industry?
US President Joe Biden has publicly criticized Exxon on several occasions and called on the US Trade Commission (FTC) to investigate evidence of illegal price gouging in the oil industry as early as 2021. He was particularly struck by the billion-dollar share buybacks and dividend payments.
Exxon itself was able to break its previous annual record of $45.2 billion from 2008. Since then, the group has cut costs in order to further increase its profitability. CFO Mikells said earnings and cash flow were still significantly higher than last year.
Despite the record results, investors reacted cautiously and dropped Exxon’s shares by around four percent in an initial reaction. The figures exceeded Wall Street analysts’ forecasts. But after its largest US competitor Chevron announced a $75 billion share buyback program and a higher dividend last week, some investors were apparently disappointed that Exxon did not present any new plans to distribute profits to shareholders for the time being.