Huge profits from oil giants are fueling calls for windfall taxes

  • The sector was buoyed by high oil and gas prices
  • Four of the world’s five largest oil companies have now reported
  • US President Biden criticized energy companies

Oct 28 (Reuters) – Global energy giants including Exxon Mobil Corp ( XOM.N ) and Chevron Corp ( CVX.N ) posted another big quarterly profit, benefiting from rising natural gas and fuel prices that have fueled global inflation. leading to new calls to further tax the sector.

Four of the five largest global oil companies now report net income of about $50 billion, which has been wiped out by tight global markets and disruptions since Moscow’s invasion of Ukraine.

The size of the profit has fueled calls from politicians and consumer groups to tax companies more to offset the damage from higher energy costs to households, businesses and the wider economy. They also criticized major oil companies for not doing enough to increase production to offset rising fuel and heating costs.

Chevron Chief Financial Officer Pierre Breber warned in an interview with Reuters that “taxing production will just reduce it.”

The company reported its second-highest profit of $11.2 billion. However, the company’s global output has fallen this year from a year ago, and other US oil companies have signaled that production in the US’s top shale-producing region is already down.

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

US President Joe Biden, who said earlier this year that Exxon was “making more money than God”, told oil companies this month that they were not doing enough to reduce energy costs.

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

On Friday, he tweeted in response to comments from Exxon’s CEO that “giving profits to shareholders is not the same as lowering prices for American families.”

Alok Sharma, president of the COP26 climate summit in the UK, said on Friday that Prime Minister Rishi Sunak’s government should explore extending the windfall tax to oil and gas firms.

“These are excess profits and should be treated accordingly as far as taxation is concerned,” Sharma said.

Shell CEO Ben Van Beurden said the energy industry “must be prepared and accept” that it will face higher taxes to help struggling parts of society. Shell posted revenue of more than $9 billion in the third quarter, surpassing the record annual profit of $31 billion set in 2008.

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Exxon Mobil, the largest U.S. company, reported net income of nearly $20 billion in the quarter that ended in September, beating expectations and surpassing the previous record it set just three months ago.

Exxon led the five oilfields in total revenue in the quarter, nearly doubling peers Shell and TotalEnergies ( TTEF.PA ). Exxon’s stock has lagged those companies for several years, but has rebounded as it has not made the same commitment as its European rivals to increase spending on renewables in 2022. BP Plc ( BP.L ), the fifth major, reports results next week.

“When others retreated in the face of uncertainty and a historic slowdown, retrenchment and layoffs, this company continued to invest,” said Exxon CEO Darren Woods.

Shares of the five major companies have posted a combined return of at least 29% this year. Exxon leads the way with an 86% gain, while the broad market S&P 500’s (.SPX) total return is minus-19% for the year, according to Refinitiv Eikon data.

European governments have scrambled to replenish gas reserves after Russia cut off most of its natural gas exports to the continent, a major customer.

Norway’s Equinor also broke new ground on Friday, helped by all-time highs in European gas prices, and Italy’s Eni ( ENI.MI ) beat consensus with a profit of 3.73 billion euros ($3.72 billion), nearly tripling its year-ago profit. increased. ). France’s TotalEnergies reported a record $10 billion in revenue on Thursday.

“Russia’s war in Ukraine has changed energy markets, reducing energy availability and raising prices,” Equinor CEO Anders Opedal 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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