Gas costs are displayed at a Mobil gasoline station in Los Angeles on Oct. 28, 2022. ExxonMobil posted report earnings in 2022, benefitting from a surge in oil costs.

Mario Tama/Getty Images

cover caption

toggle caption

Mario Tama/Getty Images

Gas costs are displayed at a Mobil gasoline station in Los Angeles on Oct. 28, 2022. ExxonMobil posted report earnings in 2022, benefitting from a surge in oil costs.

Mario Tama/Getty Images

ExxonMobil earned practically $56 billion in revenue in 2022, setting an annual report not only for itself however for any U.S. or European oil big.

Buoyed by excessive oil costs, rival Chevron additionally clocked $35 billion in earnings for the yr, regardless of a disappointing fourth quarter.

Energy firms have been reporting blockbuster earnings since final yr, after Russia’s invasion of Ukraine despatched oil costs sharply greater.

“Of course, our results clearly benefited from a favorable market,” CEO Darren Woods advised analysts, nodding to excessive crude costs for a lot of 2022.

But he additionally gave his firm credit score for with the ability to benefit from these costs. “We leaned in when others leaned out,” he mentioned.

‘More cash than God’

The excessive earnings have additionally revived perennial conversations about how a lot revenue is too a lot revenue for an oil firm — particularly as urgency over the necessity to sluggish local weather change is mounting around the globe.

Exxon’s blockbuster earnings, introduced Monday, will probably result in extra political stress from the White House. Last yr President Biden known as out Exxon for making “more money than God.”

The White House and Democrats accuse oil firms of hoarding their earnings to counterpoint shareholders, together with executives and workers, as a substitute of investing the cash in additional manufacturing to ease costs on the gasoline pump.

Last yr, between dividends and share buybacks, Exxon returned $30 million to shareholders, whereas Chevron paid out greater than $22 billion. Exxon plans to carry manufacturing flat in 2023, whereas Chevron plans to extend manufacturing by 0 to three%.

Monster earnings are again

If you do the mathematics, Exxon made some $6.3 million in revenue each hour final yr — greater than $100,000 each minute. That places Exxon up with the Apples and the Googles of the world, with the sort of extraordinary earnings most firms might by no means dream of incomes.

Or quite, it places Exxon again up in that rarefied territory. Exxon was the most important firm on this planet, reliably clocking huge earnings.

ExxonMobil CEO Darren Woods speaks throughout a press convention in Doha, Qatar, on June 21, 2022. Exxon is dealing with political warmth from the White House, which desires Big Oil to make use of their earnings to extend manufacturing additional.

Karim Jaafar/AFP by way of Getty Images

cover caption

toggle caption

Karim Jaafar/AFP by way of Getty Images

ExxonMobil CEO Darren Woods speaks throughout a press convention in Doha, Qatar, on June 21, 2022. Exxon is dealing with political warmth from the White House, which desires Big Oil to make use of their earnings to extend manufacturing additional.

Karim Jaafar/AFP by way of Getty Images

In 2020, when the pandemic triggered a crash in oil costs, vitality firms took large losses. Exxon recorded an annual lack of $22 billion, its first loss in many years. It was, humiliatingly, dropped from the Dow Jones.

A tiny upstart investor group known as Engine No. 1 challenged Exxon’s administration, accusing the corporate of not shifting quick sufficient to regulate to a world getting ready to scale back its use of oil.

In this David vs. Goliath showdown, David received the battle, with Engine No. 1’s nominees changing three Exxon board members. But Goliath is not going anyplace.

Profits immediate scrutiny, criticism

Whenever oil firms are thriving, suspicions that they’re essentially profiteering are usually not far behind.

Those accusations have turn into particularly charged as a result of Russia’s invasion of Ukraine have been central to the drive-up in crude oil costs final yr. Europe has imposed windfall taxes on vitality firms, clawing again 33% of “surplus profits” from oil and gasoline firms to redistribute to households.

Exxon has sued to dam that tax, which it estimates would price round $1.8 billion for 2022.

President Biden delivers remarks on vitality as Secretary of Energy Jennifer Granholm listens throughout an occasion within the Roosevelt Room of the White House in Washington, D.C., on Oct. 19, 2022. Biden has threatened oil firms with a “higher tax on their excess profits” and different restrictions if they do not make investments their windfall earnings in additional manufacturing.

Alex Wong/Getty Images

cover caption

toggle caption

Alex Wong/Getty Images

President Biden delivers remarks on vitality as Secretary of Energy Jennifer Granholm listens throughout an occasion within the Roosevelt Room of the White House in Washington, D.C., on Oct. 19, 2022. Biden has threatened oil firms with a “higher tax on their excess profits” and different restrictions if they do not make investments their windfall earnings in additional manufacturing.

Alex Wong/Getty Images

Meanwhile, within the U.S., California is considering a similar windfall tax. President Biden has threatened oil firms with a “higher tax on their excess profits” and different restrictions if they do not make investments their windfall earnings in additional manufacturing. But it is unclear whether or not the administration can observe via on such a menace.

On Tuesday, the White House issued an announcement excoriating oil firms for “choosing to plow those profits into padding the pockets of executives and shareholders.”

Investors, in the meantime, aren’t complaining. They continue to pressure companies to return extra earnings to traders and spend comparatively much less of it on drilling.

“Lower-carbon” ambitions

Both Exxon and Chevron emphasised their carbon footprints of their earnings calls, a serious shift from the not-so-distant previous, when oil firms uniformly denied, minimized or ignored local weather change when speaking to traders.

But their responses to local weather change deal with lowering the emissions from oil wells and pipelines, or making investments in “lower-carbon” applied sciences like hydrogen and carbon seize — not on a fast transition away from fossil fuels, as local weather advocates say is important.