Home NewsBusiness News $8.5 billion profit for BP as prices soared during Russia-Ukraine war

$8.5 billion profit for BP as prices soared during Russia-Ukraine war

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$8.5 billion profit for BP as prices soared during Russia-Ukraine war

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LONDON — BP on Tuesday reported a second-quarter profit of $8.5 billion, its biggest windfall in 14 years, becoming the latest company to gain from higher crude prices as Russia’s war in Ukraine roils global energy markets. profitable oil majors.

Just a few days ago, the two largest U.S. oil companies — Exxon Mobil and Chevron — reported that their second-quarter profits roughly tripled, while London-based Shell and France’s TotalEnergies Amazing results were also announced. The five companies’ second-quarter profits now total more than $55 billion, a stunning turnaround from the early months of the coronavirus pandemic.

The windfall comes as consumers around the world feel the sting of the highest inflation in decades and a cost-of-living crisis that has been especially painful for gas stations. Crude oil prices surged above $120 a barrel in March and retreated again in June, still up 34% from a year ago. Average U.S. natural gas prices nationwide rose in tandem, surpassing $5 a gallon for the first time, although prices are now falling, the AAA report said.

President Biden has warned the industry that he is considering all options to limit its profits if natural gas prices remain high. The president and other Democrats have been attacking the oil industry’s earnings at a time when drivers are struggling to pay for the cost of gas.

While Biden’s tools are limited — he doesn’t have enough congressional support to advance his windfall tax plan — that could change if he declares a “climate emergency,” as the administration has called it. Energy analysts predict that if natural gas prices start to rise again, Biden could use his presidential powers to tighten the government’s grip on domestic oil and gas producers.

Oil executives have pushed back against criticism from the Biden administration, saying the only way to address the supply-demand imbalance in the global oil market is to increase oil production.

“I want to make it clear that Chevron shares your concerns about the higher prices Americans are experiencing,” Chevron Chief Executive Mike Worth told Biden in an open letter. “I assure you, Chevron is doing everything in its power to help meet these challenges, increasing capital expenditures to $18 billion by 2022, more than 50 percent higher than last year.”

Analysts also pointed out that the oil market is strongly cyclical. The industry suffered losses during the 2008-2009 financial crisis and again between 2014 and 2016, most recently during the coronavirus pandemic, said Pavel Molchanov of Raymond James Investment Bank. the first two years.

“The industry is enjoying record profitability right now, but the Covid-19-related commodities crash two years ago was an epic crash,” Molchanov said in an email.

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The company said in a statement that BP’s second-quarter results were higher than the first-quarter results of $6.2 billion, helped by strong refining margins, “continued excellent oil trading performance” and higher fuel prices. Surging global demand and the war in Ukraine have been key to rising prices, directly increasing the company’s profits.

“Today’s results show that bp continues to outperform while transforming,” CEO Bernard Looney said in a statement. “We do this by providing the oil and gas the world needs today, while investing in accelerating the energy transition.”

Due to high profits, the company said it would raise its dividend payment by 10% to 6.006 cents per common share, higher than previously expected. “This increase reflects the underlying performance and cash generation of the business,” the company said.

BP, formerly BP, said it expects oil and gas prices to remain high in the third quarter “due to continued supply disruptions in Russia” and “lower levels of spare capacity”. The geopolitical outlook has also led to a shortage of gas from Europe, which is “heavily reliant on Russian pipeline flows”, which is expected to send prices “high.”

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Shell announced a larger share buyback totaling $6 billion, while Exxon Mobil reported that it distributed $7.6 billion to shareholders when dividends were included.

Major oil companies do appear to be investing in increasing supply, said Patrick De Haan, head of oil analysis at GasBuddy. But in the short term, their focus appears to be shareholder value, he said.

ExxonMobil, Chevron make huge profits on soaring oil prices

Biden accused U.S. oil majors of exploiting tensions. Speaking in the Port of Los Angeles in June, he said: “Exxon has made more money than God this year.” The company fought back, admonishing his administration for trying to “criticize and even discredit our industry.” Oil companies deny allegations that their policies artificially inflate prices.

In May, the U.K. government announced a 25% windfall tax on oil and gas companies’ profits – revenue to be used to help low-income families struggling with soaring living costs. U.S. lawmakers have considered a similar tax, but it is unlikely to pass the tie in the Senate.

British MP and Opposition Chancellor of the Exchequer Rachel Reeves criticised BP’s profits, tweeting: “There is a lot of concern about another rise in energy prices in the autumn, but again we are seeing oil and gas producers The profits are eye-popping.”

Left-wing politicians and advocacy groups in both the US and UK have called for additional taxes on oil companies’ windfall profits.

Greenpeace UK tweeted: “Gas companies like Shell and BP are making record profits and it feels especially obscene and cruel that consumers will struggle to keep warm this winter.”

Rep. Rosa DeLauro (D-Conn.) tweeted: “Corporate monopolies are expanding their market power, hurting households and driving up inflation. … Americans should not be allowed price gouging.”

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