The White House is doubling down on its rhetoric against oil and gas companies in the wake of higher gasoline prices—rhetoric that is likely to do precious little to inspire long term investments in an industry that is scrambling to meet demand—but one that could garner support for a possible windfall tax on the heavily profitable industry.
"It's outrageous that oil and gas companies are able to take advantage and make four times the profits that they made when there wasn't a war," deputy director of the National Economic Council Bharat Ramamurti told CNN in a phone interview on Thursday.
Ramamurti wasn't dismissive about the windfall tax either. When asked by CNN if the White House would support the windfall profit tax, he replied, "We review all of those proposals. We are open to lots of different ideas. We realize there is a problem here we need to tackle."
Public oil and gas companies are indeed profiting handsomely from today's high crude prices, and are expected to rake in $834 billion in total free cash flow this year—an all-time high, according to energy intelligence firm Rystad Energy.
This compares to $493 billion in 2021—another record profit year, and $126 billion in 2020—the first year of the pandemic as demand crashed.
Many U.S. oil companies lost money during the downturn, much to the dismay of the 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 balloon this year, Rystad said, as oil companies break the $1 trillion barrier for the first time. This is expected to increase so significantly as oil and gas companies typically use these funds to finance new investments, pay down debt, and pay out dividends. While there are plenty of oil and gas companies paying down debt and making large payouts to shareholders who weathered the lean years of the pandemic, the growth in investments is only set to increase slightly this year.
President Biden upped his anti-oil company rhetoric on Wednesday night on Jimmy Kimmel Live, accusing oil companies of making "more money not drilling and buying back their own stock."
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More