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ANOTHER GOOD QUARTER FOR BIG OIL: Oil and gas supermajors enjoyed another quarter of exorbitant earnings driven by persistently high crude and fuel prices and, for some, record regional production levels.
The third quarter performances, posted by ExxonMobil, Chevron, and Shell yesterday and today, show a continued rebound for the industry, which all year has been earning back the tens of billions of dollars it shed during the worst of COVID-19 thanks to cratering demand.
The numbers: Exxon earned a record $19.7 billion in Q3 and is the only of the three to see profits rise compared to Q2, when earnings reached $17.9 billion.
For Chevron and Shell, earnings reached $11.2 billion and $9.5 billion respectively. Neither topped Q2, but they blew past their profits from Q32021, doubling earnings compared to the same quarter last year.
Oil prices were down from the second quarter but remained strong, and higher prices for refined products buttressed earnings to make up for the drop in crude prices, companies said.
A quarter of records: Exxon and Chevron both saw record production in the Permian Basin, the country’s most abundant shale deposit.
Exxon’s output rose to nearly 560,000 barrels of oil equivalent per day. Chevron’s reached up to more than 700,000 BOE per day, a 12% increase compared to Q32021.
Exxon also refined a record volume of crude oil in the quarter.
The rebound continues: The industry is welcoming its change in fortune after being driven to shrink operations and workforces in 2020, and it’s now being extra careful to pay down debt and reward shareholders, who’ve been whiplashed by the boom-bust commodities markets over the last few years.
Shell plans to increase its per-share dividend by 15% for the fourth quarter, it said. Exxon is upping its dividend, too.
With every healthy quarter, the target on the industry’s back gets larger.
President Joe Biden, California Gov. Gavin Newsom, and Democratic members of Congress have scolded companies for their high earnings and accused them of gouging drivers, accusations companies have denied.
“Gas prices are high because fossil fuel companies are making record profits. We need a windfall profits tax to put that money in the pockets of working families,” Rep. Ro Khanna, who has helped lead the House Oversight Committee’s investigations into the oil industry during this Congress and introduced a windfall profits bill back in March, wrote in a tweet last night.
While Khanna’s windfall bill hasn’t moved much, he’s now taking a stab at export restrictions — something the Biden administration has dangled in front of top refiners to try and persuade them to keep more refined products in the domestic market.
Khanna is introducing a bill today to ban gasoline exports, Politico reported this morning.
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SCHOLZ & MACRON THREATEN RETALIATION OVER ELECTRIC VEHICLE SUBSIDIES: German Chancellor Olaf Scholz and French President Emmanuel Macron reportedly bonded during a nearly four-hour lunch in Paris Wednesday over their shared distaste for the Inflation Reduction Act and its “Buy American” provisions for electric vehicle subsidies meant to reshore production.
Macron was the first to issue a public warning, telling local TV channel France 2 after the two met for lunch: “We need a Buy European Act like the Americans, we need to reserve [our subsidies] for our European manufacturers.”
“You have China that is protecting its industry, the U.S. that is protecting its industry and Europe that is an open house,” Macron said, adding that he and Scholz “have a real convergence to move forward on the topic, we had a very good conversation.”
JOHN KERRY WEIGHING DEPARTURE AS CLIMATE ENVOY: Biden’s special climate envoy, John Kerry, is “actively weighing” whether to depart the administration after the COP27 climate conference, according to a new report from Axios.
The November elections could pose new challenges as Kerry seeks to navigate a political landscape dominated by global energy needs in wake of Russia’s war in Ukraine and diminishing traction on cooperation with China, the world’s largest carbon emitter, the Examiner’s Katherine Doyle reports. Kerry also faces the prospect of GOP-led inquiries in Congress if Republicans gain the majority in the upcoming midterm elections, and could also face scrutiny from climate activists frustrated by the scope of his progress.
EU GAS USE DOWN IN AUGUST AND SEPTEMBER: Europe slashed its gas use in both August and September, new data from the EU statistics office show, as industries cut production in response to soaring prices and Russia continued to throttle its supply.
Overall gas use in the EU dropped by 14% in August, compared to the five-year average for the month, and by 15% compared to that average in September, the report shows.
The cuts came after EU leaders agreed in July to voluntarily reduce gas consumption by 15% beginning in August, as the bloc raced to fill its storage tanks ahead of winter.
CHINA BOOSTS OIL PURCHASES AMID SIGNS OF ECONOMIC REOPENING: China has snapped up millions of barrels of oil since last week in a late buying spree, signaling a ramp-up of consumption.
Some of China’s biggest buyers have purchased at least 10 million barrels of oil since late last week from the Middle East, West Africa and Brazil, Bloomberg reports. The cargoes are slated to arrive in December and January.
OPEC LIKELY TO KEEP ITS VIEW OF LONG-TERM OIL DEMAND IN FORECAST: OPEC is likely to maintain its view that world oil demand will rise for another decade in its forthcoming 2022 World Oil Outlook report, two OPEC sources told Reuters, sticking to its earlier, more bullish assessments that oil demand will reach a plateau after 2035.
“It is similar to last year in terms of the demand outlook,” one of the OPEC sources told Reuters. The second source said OPEC has not brought forward its timeline for when plateau demand is forecast.
The long-term assessment breaks with other major reports, including one published by the International Energy Agency this week, which said demand for all fossil fuels would peak by the end of the decade.
EU STRIKES DEAL TO BAN SALES OF NEW DIESEL AND GASOLINE CARS FROM 2035: The EU is planning to phase out sale of new diesel and gasoline-powered vehicles beginning in 2035 after leaders in the bloc reached agreement late yesterday on the issue.
The European Council and European Parliament said in a statement that they had reached a provisional deal on the European Commission’s proposal for “zero-emission road mobility by 2035,” which seeks to slash CO2 emissions from new vans and passenger vehicles by 100% compared to 2021 levels. Formal approval by both the European Council and the European Parliament will be required before the ban takes effect.
“This extremely far-reaching decision is without precedent,” Oliver Zipse, the CEO of BMW and chair of the European Automobile Manufacturers’ Association, told CNBC in a statement. “It means that the European Union will now be the first and only world region to go all-electric.”
HOUSE REPUBLICANS PITCH VOTERS ON ENERGY POLICY CHANGE: House Republicans are hoping to win voters over on Nov. 8 by promising to command an energy policy turnabout in Washington if voters award the party control of the chamber, as Jeremy writes for this week’s magazine.
Republicans have sought to present a clear contrast with Biden’s green policies that have disfavored new oil and gas infrastructure and the expansion of leasing on federal lands.
Operators are increasing production, as mentioned above, and total oil production is up under Biden, although the Republicans are making the case that Biden and the longer term “market signals” communicated by his climate agenda have held industry back from being able to optimally help drive prices downward.
The conference is promising to support more domestic production of oil and gas, which they maintain can serve global greenhouse gas emissions reduction goals and the security of U.S. energy supplies.
“I’m all for renewables, but I believe in an all-of-the-above-type energy strategy, and I don’t believe that we can destroy our economy, trying to achieve [more] renewables,” said Republican Rep. Buddy Carter.
One senior House Republican policy adviser said the caucus wants to send more positive signals to the oil and gas sector to communicate that it’s safe to invest and expand as long as Republicans have control.
“We do play a role. And even acknowledging that we will have an adversarial White House, the market signals from Congress, and showing that real regulatory reform is our priority, matters,” the person said.
The Rundown
Washington Post EPA closed a refinery that rained oil. Now it’s a ‘ticking time bomb.’
E&E News Will electric vehicles kill the gas station?
Wall Street Journal Carbon capture projects are taking off. Here’s how they stash the greenhouse gas.
Calendar
THURSDAY | NOVEMBER 3
11 a.m. The National Science Foundation holds a meeting of the Advisory Committee for Geosciences. Learn more and register here.
