High prices at the pump and rewards for energy-company shareholders after record losses during the pandemic will persist for the foreseeable future, a major energy executive says.
With gasoline prices continuing to break all-time records daily, drivers can expect to continue dumping more money into their tanks through the upcoming busy summer travel months, thanks to steady demand, limited supply and reduced refining capacity.
The national average for gasoline reached yet another new high Friday of $4.43 per gallon, 35 cents higher than a month ago and 32 cents higher than when gas last hit record levels in 2008.
Vicki Hollub, president and CEO of Occidental Petroleum, said Friday during a web conference among Federal Reserve officials, lawmakers and energy executives that consumers should expect the prices of oil and gasoline to remain elevated and for energy firms to keep prioritizing returns for investors.
“We need to respect the fact that the supply chains have been disrupted for the oil and gas industry in a very significant way,” she said. “That, coupled with the investor pressure, means that we’re struggling now to meet what demand is… Even before the pandemic, we were starting to see the pressure from the investment community because of growth and the lack of return on capital to the investors.”
Ms. Hollub said: “Certainly, oil is going to continue to stay at a high price. Gasoline prices will stay high as well.”
Democrats on Capitol Hill will seek to target businesses like Occidental next week when they consider the Consumer Fuel Price Gouging Prevention Act. The legislation, spearheaded by vulnerable House Democratic Reps. Katie Porter of California and Kim Schrier of Washington state, would bar “excessive” or “exploitative” fuel prices.
It would also beef up the Federal Trade Commission’s power to go after Big Oil, which Democrats have accused of purposely ripping off consumers during a global energy crunch and Russia’s unprovoked war against Ukraine.
However, rank-and-file Democrats question what — if any — impact it would have, given there has never been proof of a widespread gas price-gouging scheme. Because of this and constituent pressure, Democrats want Congress to take additional steps, such as passing a gas tax holiday, providing direct rebates or imposing a windfall tax against Big Oil’s record profits.
Ms. Hollub and other executives at Occidental said during an investor call earlier this week that, thanks to the “highest reported and adjusted earnings in over a decade,” the company plans this year to reduce its debt by $5 billion and return $3 billion to shareholders through stock buybacks.
Occidental reported $8.53 billion in first-quarter revenue, with shares increasing roughly 100% in value since the beginning of the year. It also expects production to grow through the end of the year.
Ms. Hollub’s remarks echoed that of other energy executives in recent weeks because of the industry’s record profits. The top 21 oil companies raked in a combined $41 billion in profits in the first quarter, doubling profits during the same period in 2021, according to an analysis by the nonprofit watchdog group Accountable.US.
Energy companies have justified their prioritization of investor returns by noting the record losses they faced during the pandemic. Exxon, for example, made $23 billion in profit for 2021 after losing $22.4 billion the previous year.
White House press secretary Jen Psaki on Friday acknowledged challenges facing Americans’ pocketbooks with record inflation, while touting steps the administration has taken to try to lower gas prices. Those actions include a historic release from the strategic petroleum reserve and allowing the summer sale of cheaper E15 gasoline in primarily western states.
Repeating a new talking point from President Biden, Ms. Psaki tried to highlight differences between their plan and that of Republicans.
“Leading the country means that the buck stops with you and that every challenge we face is on your desk, and he’s very aware of that,” she told reporters during her final briefing ahead of her departure from the White House. “What we’d say to Americans also is look at the alternative. We all acknowledge inflation and cost is a challenging issue. What [are] the Republicans … presenting as the option?”