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Big Oil Making Big Bucks As Pump Prices Stay High

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ExxonMobil’s quarterly fuel profits could reach as high as $4.4 billion in the second quarter as major refiners were set to collectively make $14 billion in profits, The Wall Street Journal reported.

Overall, ExxonMobil is projecting $18 billion in profit this quarter, its highest profit margin in 25 years. The projections come as average fuel prices remain elevated throughout the country, averaging well over $4 per gallon and often up as much as $1.50 from this time last year, according to AAA data. (RELATED: Court Hands Exxon Huge Loss In Climate Change Lawsuit)

From 2017-2019, ExxonMobil averaged fuel profits of $853 million in the second quarter, according to the WSJ. A $4.4 billion second-quarter profit would represent an increase of more than 515%.

Compared to the first quarter of last year, shares in the largest eight refiners are predicted to increase in value by 652% on average, investment bank Tudor Pickering Holt & Co. told the WSJ.

U.S. refineries reduced production by over 1 million barrels per day during the pandemic, leading to reduced supply, JPMorgan Chase told the WSJ. As fuel demand increased as economies reopened, the resultant price increase driven by new demand meant that the profit margin on individual barrels of oil went up, the WSJ reported.

U.S. Gulf Coast refinery margins have reached almost as high as $42 per barrel, over four times the 2017-2019 pre-pandemic average, and reaching levels typically only seen during catastrophic short-term supply-chain emergencies, such as hurricanes, according to the WSJ.

A general view of an Exxon Mobil refinery on April 23, 2020 in Rotterdam, Netherlands. (Dean Mouhtaropoulos/Getty Images)

A view of an Exxon Mobil refinery on April 23, 2020 in Rotterdam, Netherlands. (Dean Mouhtaropoulos/Getty Images)

While President Joe Biden asked refiners to expand capacity in June in an effort to lower prices, the WSJ, citing industry analysts, says that refiners are unlikely to respond to the call. Refiners predict that as the U.S. and other developed nations transition to alternative energy sources and electric vehicles, demand for fuel will plateau, reducing the incentive to build new refineries, according to the WSJ.

While gas prices are falling, down on average from the peak of $5.02 in June to $4.44 on July 21, according to AAA, demand is falling as well. The AAA report details that demand in July 2022 was lower by 800,000 barrels per day than July 2021, and consistent with 2020 levels when COVID-19 measures reduced demand.

ExxonMobil did not immediately respond to a request for comment.

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