Oil giants’ massive profits rekindle calls for windfall taxes

  • Sector driven by rising oil and gas prices
  • Four of the world’s five largest oil companies have now announced
  • US President Biden criticizes energy companies

Oct 28 (Reuters) – Global energy giants including Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N) posted another round of huge quarterly profits, benefiting from soaring oil prices natural gas and fuel that have spurred inflation around the world and led to new calls to tax the sector more.

Four of the world’s five largest oil companies have now reported results, totaling nearly $50 billion in net revenue, buoyed by tight global markets and disruption following Moscow’s invasion of Ukraine.

The sheer scale of the profits has rekindled calls from politicians and consumer groups to impose more taxes on businesses in order to raise funds to offset the hit to households, businesses and the wider economy from the rise. energy costs. They also blamed big oil companies for not doing enough to increase production to offset rising fuel and heating costs.

Chevron’s chief financial officer, Pierre Breber, warned in an interview with Reuters that “taxing production will only reduce it”.

The company reported its second-highest profit of $11.2 billion. However, the company’s global production is down so far this year compared to a year ago, and other U.S. oil companies have reported that production in the top-producing U.S. shale region was already down.

“If you increase the costs of energy producers, it will reduce investment, which goes against the intention of increasing suppliers and making energy more affordable.”

US President Joe Biden, who earlier this year said Exxon was making “more money than God”, this month told oil companies they weren’t doing enough to cut energy costs.

Hours after Shell (SHEL.L) reported quarterly profit of $9.45 billion and increased its dividend by 15% on Thursday, Biden said the company was misusing its profits.

On Friday, he noted on Twitter in response to a comment from Exxon’s CEO that “giving profits to shareholders is not the same as bringing down prices for American families.”

In the UK, COP26 climate summit chair Alok Sharma said on Friday that Prime Minister Rishi Sunak’s government should consider extending a one-off tax on oil and gas companies.

“These are excessive profits, and they need to be treated appropriately when it comes to taxation,” Sharma said.

Shell CEO Ben Van Beurden said the energy industry “should be prepared and accept” that it will face higher taxes to help struggling parts of society. Shell earned more than $9 billion in the third quarter, putting it on track to top its record annual profit of $31 billion set in 2008.

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Exxon Mobil, the largest U.S. major, reported net profit of nearly $20 billion in the quarter ending September, beating expectations and topping its previous record set three months earlier.

Exxon led the five oil majors in overall revenue, nearly overtaking peers Shell and TotalEnergies (TTEF.PA) in the quarter. Shares of Exxon have lagged those companies’ stocks for several years, but have rebounded in 2022 even as it hasn’t made the same pledge as its European rivals to increase spending on renewables . BP Plc (BP.L), the fifth major, announces its results next week.

“Where others have retreated in the face of uncertainty and a historic downturn, retreating and retreating, this company has moved forward, continuing to invest,” said Exxon CEO Darren Woods.

Shares of the five majors have all posted a total return of at least 29% this year. Exxon leads the way with an 86% increase, while the broad market S&P 500 (.SPX) total return is minus 19% on the year, according to data from Refinitiv Eikon.

European governments have rushed to fill gas storage after Russia cut off most of its natural gas exports to the continent, its biggest customer.

On Friday, Norwegian firm Equinor also broke new ground, helped by record high gas prices in Europe, and Italy’s Eni (ENI.MI) nearly tripled its profit from a year ago, beating consensus with a profit of 3.73 billion euros ($3.72 billion). ). The French TotalEnergies announced Thursday a record profit of 10 billion dollars.

“The Russian war in Ukraine changed energy markets, reduced energy availability and increased prices,” Anders Opedal, chief executive of Equinor, said in a statement.

Reporting by Sabrina Valle in Houston and Ron Bousso in London Additional reporting by Francesca Landini, Nerijus Adomaitis and Nora Bull Writing by David Gaffen Editing by David Evans, Kirsten Donovan and Matthew Lewis

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