Mario Tama/Getty Images
Gas prices are displayed at a Mobil gas station in Los
Angeles on Oct. 28, 2022. ExxonMobil posted record earnings in 2022,
benefitting from a surge in oil prices.
ExxonMobil earned nearly $56 billion in profit in 2022, setting an
annual record not just for itself but for any U.S. or European oil
Buoyed by high oil prices, rival Chevron also clocked
$35 billion in profits for the year, despite a disappointing fourth
Energy companies have been reporting blockbuster
profits since last year, after Russia's invasion of Ukraine sent oil
prices sharply higher.
"Of course, our results clearly benefited from a favorable
market," CEO Darren Woods told analysts, nodding to high crude prices
for much of 2022.
But he also gave his company credit for
being able to take advantage of those prices. "We leaned in when others
leaned out," he said.
'More money than God'
The high profits have also revived perennial conversations about how much profit is too much profit for an oil company — especially as urgency over the need to slow climate change is mounting around the world.
blockbuster earnings, announced Monday, will likely lead to more
political pressure from the White House. Last year President Biden
called out Exxon for making "more money than God."
The White House and Democrats accuse oil companies of hoarding
their profits to enrich shareholders, including executives and
employees, instead of investing the money in more production to ease
prices at the gas pump.
Last year, between dividends and share
buybacks, Exxon returned $30 million to shareholders, while Chevron paid
out more than $22 billion. Exxon plans to hold production flat in 2023,
while Chevron plans to increase production by 0 to 3%.
Monster profits are back
you do the math, Exxon made some $6.3 million in profit every hour last
year — more than $100,000 every minute. That puts Exxon up with the
Apples and the Googles of the world, with the kind of extraordinary
profits most companies could never dream of earning.
Or rather, it puts Exxon back up in that rarefied territory. Exxon used to be the largest company in the world, reliably clocking enormous profits.
Karim Jaafar/AFP via Getty Images
ExxonMobil CEO Darren Woods speaks during a press
conference in Doha, Qatar, on June 21, 2022. Exxon is facing political
heat from the White House, which wants Big Oil to use their profits to
increase production further.
In 2020, when the pandemic triggered a crash in oil prices, energy
companies took huge losses. Exxon recorded an annual loss of $22
billion, its first loss in decades. It was, humiliatingly, dropped from the Dow Jones.
tiny upstart investor group called Engine No. 1 challenged Exxon's
management, accusing the company of not moving fast enough to adjust to a
world preparing to reduce its use of oil.
In this David vs. Goliath showdown, David won the battle, with
Engine No. 1's nominees replacing three Exxon board members. But Goliath
isn't going anywhere.
Profits prompt scrutiny, criticism
Whenever oil companies are thriving, suspicions that they are fundamentally profiteering are not far behind.
accusations have become especially charged because Russia's invasion of
Ukraine were central to the drive-up in crude oil prices last year.
Europe has imposed windfall taxes on energy companies, clawing back 33% of "surplus profits" from oil and gas companies to redistribute to households.
Exxon has sued to block that tax, which it estimates would cost around $1.8 billion for 2022.
Alex Wong/Getty Images
President Biden delivers remarks on energy as Secretary
of Energy Jennifer Granholm listens during an event in the Roosevelt
Room of the White House in Washington, D.C., on Oct. 19, 2022. Biden has
threatened oil companies with a "higher tax on their excess profits"
and other restrictions if they don't invest their windfall earnings in
Meanwhile, in the U.S., California is considering a similar windfall tax.
President Biden has threatened oil companies with a "higher tax on
their excess profits" and other restrictions if they don't invest their
windfall earnings in more production. But it's unclear whether the
administration can follow through on such a threat.
Tuesday, the White House issued a statement excoriating oil companies
for "choosing to plow those profits into padding the pockets of
executives and shareholders."
Investors, meanwhile, aren't complaining. They continue to pressure companies to return more profits to investors and spend relatively less of it on drilling.
Both Exxon and
Chevron emphasized their carbon footprints in their earnings calls, a
major shift from the not-so-distant past, when oil companies uniformly
denied, minimized or ignored climate change when talking to investors.
their responses to climate change focus on reducing the emissions from
oil wells and pipelines, or making investments in "lower-carbon"
technologies like hydrogen and carbon capture — not on a rapid
transition away from fossil fuels, as climate advocates say is