High gas prices help serve up steep profits for California’s Chevron, other oil giants

Oil companies brought in staggering profits once again as people worldwide struggled with high gasoline and energy prices.

Exxon Mobil broke records with its profits in the third quarter, raking in $19.66 billion in net income. The Irving, Texas, company said Friday that it booked $112.07 billion in quarterly revenue, more than double the revenue it received last year during the same period.

Chevron had $11.23 billion in profits, almost reaching the record profits it attained last quarter, and the San Ramon, Calif., company brought in $66.64 billion in revenues.

The high cost of energy has hit consumers in multiple ways.

Americans, especially low-income workers, have struggled with painfully high gasoline prices in recent months, with the U.S. average price for regular-grade gas running well above $4 a gallon in July and the California average above $6 a gallon, according to AAA.

High energy prices also hit manufacturers and retailers, who pass on those costs to customers in the form of high prices for food, clothing and other goods.

Gasoline eased somewhat toward the end of the quarter, but the U.S. average was still more than $3.72 a gallon and the California average more than $5.79 a gallon in late September.

Steep gas prices and oil company profits have drawn criticism from President Biden and Democratic lawmakers. Gov. Gavin Newsom took to Twitter again Friday to rip energy company profits. Newsom last week took aim at Valero Energy Corp. after it reported profits for the July-September quarter that were 500% higher than a year earlier.

“Gas prices shouldn’t be this high. Time to crack down on oil’s price gouging tactics and put their profits back into your pockets,” Newsom tweeted Friday. Newsom has called for a price-gouging penalty as well as additional accountability from oil companies and refiners that do business in the state.

Exxon boosted production of gasoline and oil during the quarter to meet growing demand. It had its best-ever refinery output in North America and its highest globally since 2008, the company said. And it produced 3.7 million barrels of oil or oil-equivalent per day, and had record production in the Permian Basin, the most productive oil field in the U.S.

The investments Exxon made, even during the pandemic, enabled the company to increase production to meet the needs of customers, Chief Executive Darren Woods said in a conference call with investors.

“Where others pulled back in the face of uncertainty and a historic slowdown, retreating and retrenching, this company moves forward, continuing to invest and build to help meet the demand we see today and position the company for long term success in each of our businesses,” Woods said.

Natural gas prices have also been high, especially as demand for liquefied natural gas has remained strong globally. The U.S. has been increasingly exporting liquefied natural gas to Asia and Europe, especially as supply of Russian natural gas declined after Russia invaded Ukraine and prices skyrocketed. Woods listed inventory concerns as one of the reasons American natural gas prices rose by 15% during the quarter.

Oil prices were initially high during the quarter but fell gradually. A barrel of benchmark U.S. crude was selling for more than $100 when the quarter began in July but was selling for closer to $80 at the end of September. Even so, diesel prices remain high, according to AAA, which affects delivery costs and raises prices for all sorts of consumer goods.

To help meet growing demand, Exxon is expanding its oil refinery in Beaumont, Texas, and expects the additional refined product to become available in early 2023.

Exxon’s refining businesses was the star performer during the quarter, said Peter McNally, global sector lead at Third Bridge, in a note to investors. “While some of the political rhetoric cooled during the quarter, investment in the company’s fuel manufacturing segment heated up along with the profits,” McNally said.

Chevron’s said its $11.2-billion quarterly net income was the second-highest in company history, surpassed only by the previous quarter when it report more than $12 billion in net income.

American oil companies aren’t the only ones benefiting from high energy prices. European energy giants Shell and TotalEnergies reported huge profits Thursday. That fueled calls to tax the profits of energy producers which have benefited from high oil and natural gas prices following Russia’s invasion of Ukraine, even as Europe heads into winter during an energy crisis.

Shares of Exxon Mobil closed at $110.70, up 2.9%. Chevron rose slightly more than 1% to $179.98.