🚗 🚙 Turn your trusty old car into trustworthy journalism Learn more

Big oil had one of its biggest years ever in 2022

Lily Jamali Jan 3, 2023
Heard on:
HTML EMBED:
COPY
Chevron posted its most profitable quarter of all time after the war in Ukraine broke out. Mario Tama/Getty Images

Big oil had one of its biggest years ever in 2022

Lily Jamali Jan 3, 2023
Heard on:
Chevron posted its most profitable quarter of all time after the war in Ukraine broke out. Mario Tama/Getty Images
HTML EMBED:
COPY

2022 was a very good year for the world’s major oil companies, and U.S. energy giants Exxon Mobil and Chevron were no exception. Both companies reported their most profitable quarters of all time following Russia’s invasion of Ukraine last year.

After that banner year, what’s in store for the industry in 2023?

Extreme volatility is a defining characteristic of the modern energy industry, said Mark Finley, fellow at Rice University’s Baker Institute.

“These companies have great years and they have, you know, spectacularly bad years,” he said.

Much of that is tied to the price of oil, which languished for the better part of a decade and crashed early in the pandemic. But U.S. oil prices topped $120 a barrel last year — their highest level since 2014

“Every part of the fossil energy value chain did very well: producing oil and natural gas, refining crude oil into products like gasoline and diesel fuel,” Finley said. “All of these things paid off very handsomely.”

The resulting profits have caused a backlash. President Joe Biden has called for oil companies to invest profits in producing more oil, instead of funneling them back to shareholders. All this is happening as consumers pay more.

“There’s no question that high oil prices and, of course, the surge in gasoline prices here in the United States has been a major driver to inflation,” said Amy Myers Jaffe, who directs the Sustainability Lab at NYU’s School of Professional Studies.

Jaffe said she expects 2023 will be marked by more debate about whether or not those high oil company profits should be taxed. “And then what will we do with that money if we tax those profits away?” she said.

Regardless of how that debate plays out, the industry is far more disciplined than it was during the last boom in oil prices, per Pavel Molchanov, energy analyst at Raymond James.

“They are spending on new projects and new oil wells much less than they were a decade ago,” he said.

If profits don’t go toward boosting production, Molchanov said to expect the price of oil to climb even higher in 2023.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.