With the price of crude oil soaring to more than a hundred dollars a barrel this year, and A.A.A. reporting that the average national gas price reached a new high of $4.37 per gallon last week, Big Oil has been making historic profits. In the first three months of 2022, ExxonMobil pocketed $5.5 billion after taxes; Chevron gained $6.3 billion; and ConocoPhillips made $5.8 billion. Smaller energy producers, which are concentrated in the U.S. and often referred to as wildcatters, are also profiting enormously. Last week, Pioneer Natural Resources reported first-quarter earnings of two billion dollars, and Marathon Oil reported revenues of $1.3 billion.

(So what to do with the record profits? Increase production to make even more money? No, buy back stock. You read correctly reader. Record profits mean only to invest in stock.)

Exxon said that it intends to triple its purchases of its own stock from investors—a financial tactic corporations use to reduce the number of shares they have outstanding and boost their earnings per share. The company announced it will spend up to thirty billion dollars on buybacks between now and the end of 2024. Chevron said that it will devote ten billion dollars this year to buybacks, double its previous target.

(Record profits. Increase production? No, decrease production.)

What about increasing output? Exxon and Chevron both reported that, during the first quarter, their over-all production of oil and gas, which is pumped from drilling facilities in many parts of the world, fell slightly compared with the previous quarter. On the domestic front, both companies said that their U.S. operations produced slightly less crude in the first quarter of this year than they did in the previous three months, but more than they did in the first quarter of 2021.

Courtesy the New Yorker