The White House reinforces the rhetoric of the anti-oil companies

The White House is doubling down on its rhetoric against oil and gas companies in the wake of rising gasoline prices — rhetoric that is unlikely to do much to inspire long-term investment in an industry struggling to respond on demand – but which could garner support for a possible one-off tax on highly profitable industry.

“It is outrageous that oil and gas companies can take advantage of this and make four times the profits they made when there was no war,” National Economic Council deputy director Bharat told CNN on Thursday. Ramamurti, during a telephone interview.

Nor was Ramamurti dismissive about the windfall tax. When asked by CNN if the White House would support the windfall tax, he replied: “We are looking at all of these proposals. We are open to many different ideas. We realize there is a problem. here that we have to solve.”

State-owned oil and gas companies are indeed benefiting greatly from today’s high crude prices and are expected to reap $834 billion in free cash flow this year, an all-time high, according to energy intelligence firm Rystad Energy.

That compares to $493 billion in 2021 – another year of record profits, and $126 billion in 2020 – the first year of the pandemic as demand collapsed.

Many US oil companies lost money during the recession, much to the dismay of shareholders. Exxon lost $22 billion in 2020, while Conoco Phillips lost nearly $3 billion. Chevron lost $5.5 billion that year.

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Cash from operations is also expected to explode this year, Rystad said, as oil companies cross the $1 trillion mark for the first time. This is expected to grow so significantly that oil and gas companies typically use these funds to fund new investments, pay down debt and pay dividends. Although many oil and gas companies are paying down debt and making large payouts to shareholders who weathered the tough pandemic years, investment growth is expected to pick up only slightly this year.

President Biden reinforced his anti-oil company rhetoric Wednesday night on Jimmy Kimmel Live, accusing oil companies of making “more money without drilling and buying back their own stock.”

By Julianne Geiger for Oilprice.com

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