Biden Energy guru renews Big Oil call to reinvest profits.

ExxonMobil’s profitability pales in comparison to Apple and Microsoft.

Amos Hochstein, an energy adviser to the Biden administration, said this week that American oil companies are under pressure from the White House to impose a surprise profits tax if they don’t reinvest this year’s huge profits in expanding oil production. I warned you that you would face it. “Profits of this kind need to be reinvested,” he said, but were not returned to the company’s owners.

Maybe he knew what was coming.Next day ExxonMobil
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announced its intention to buy back $50 billion worth of shares by the end of 2024 in a strategy update for investors. This is up from his previous $15 billion.

Such big money will support Exxon shares, which rose 300% from pandemic lows when oil prices briefly hit zero and Exxon cut dividends to shareholders.

Don’t expect Exxon or any of the other big oil companies to suddenly change strategy just because Hochstein (49, former lobbyist and staffer of Presidents Obama and John Kerry) tells them to. please give me. This is the man who has been threatening the industry with tax forfeitures for months. A few weeks ago, he said he was “eventually going to phase out the use of oil.”

However, political and public pressure To do influence corporate strategy. Exxon has dramatically increased its investment in low carbon. It’s his 15-year algae-to-oil research venture that isn’t as hyped as it used to be (and is rumored to be on the cutting board), but there’s plenty more. Along Texas’ Gulf Coast, Exxon is investing billions in carbon capture and sequestration systems that aim to collect and capture 100 million tons of emissions annually from refineries and chemical plants. . Also in the Permian Basin oil fields, Exxon has announced his intention to achieve net zero carbon emissions by 2030. This could include building a large solar power plant in eastern New Mexico to replace electricity generated by burning natural gas.

These initiatives, as well as a $3 billion “blue” hydrogen project at a refinery in Baytown, Texas, will be supported by an investment tax credit under the Inflation Reduction Act. Meanwhile, in Alberta, Canada, a renewable diesel plant will be operational in his 2024, producing 7 million barrels of fuel annually from agricultural feedstocks and reducing annual carbon dioxide emissions by about 3 million tons.

A company spokesperson didn’t respond to a request for comment, but if Biden finds a way to nationalize Exxon’s profits, he would rather cut low-carbon investments than pull out of oil, which is most profitable. Much more likely to make ends meet: Permian, offshore gas operations in Guyana, expanding LNG export capacity to maintain natural gas supplies to Europe.

Next month, New Mexico’s crude oil production will overtake all of Mexico at 1.7 million bpd, thanks to tens of billions of dollars invested by Exxon in the western Permian Basin. That’s double what he did just four years ago, and next year the U.S. producer is set to surpass his 12.8 million barrels per day record high set in 2019.

Downstream mega-projects include expanding refining operations in Beaumont, Baton Rouge, Singapore and China to help increase fuel and feedstock supplies and reduce costs. Overall, the company is investing his $25 billion in capital projects this year. But according to the Biden administration’s Hochstein, that’s not enough.

For now, Exxon can afford it all. Analysts expect Exxon to generate $47 billion in free cash flow this year. Net income he exceeds $50 billion. That certainly sounds like a lot, but given that total sales of 3.7 million barrels a day generate more than $400 billion in revenue for him, Exxon’s net profit is around 13% of his.

If that’s too profitable for Hochstein, he needs to look around. Apple Computer had his record year of 25% net profit margin with his $394 billion in sales generating $100 billion in net profit. Last year, Apple bought back $89 billion of his stock and distributed $14.8 billion in dividends.

microsoft
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It had a net profit of $73 billion on revenue of $198 billion for a net profit margin of 37%. With over $100 billion in cash, he bought back $33 billion of his stock last year and paid out $18 billion in dividends.

Where is the windfall profit tax claim on them? Better yet, rather than demonize the US’s biggest economic engine for making a profit, why not celebrate them?