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Big Oil reaping record profits on soaring fuel costs

While we are struggling to pay up at the pump, Big Oil companies are breaking records with historically high profits

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Customers pump gas even as prices rose to more than $5 a gallon in Salt Lake City on June 9, 2022.

People pump gas even as prices rose to more than $5 a gallon at a Chevron in Salt Lake City on June 9, 2022. Petroleum producers broke profit records last quarter, earnings reports show.

Kristin Murphy, Deseret News

Amid U.S. inflation running at 40-year highs, driven in large part by soaring gas and energy prices, the behemoths of the petroleum industry broke records of their own in the last quarter, reaping historically high profits according to the latest earnings reports.

Driving the news: Oil drilling titans Chevron, Exxon Mobile, Shell and BP all released their latest quarterly earnings reports over the last few days and most of them hit new, all-time profit records for the second quarter of 2022.

The huge earnings came as consumer gas prices rocketed to historic highs in June as Russia’s invasion of Ukraine, and widespread sanctions, roiled global oil markets. Exorbitant fuels prices have challenged family budgets across the country, not only forcing hard decisions about vacation getaways and everyday driving habits but also driving up the costs of groceries and most consumer and manufacturing goods, thanks to pricier-than-ever delivery costs.

The latest Consumer Price Index report pegged June inflation at 9.1%, the highest year-over-year increase since 1981.

U.S. consumers are now paying for groceries that are up 10.4% over last year, gas that’s up nearly 60% over 2021 and shelter expenses that have risen 5.6% since June 2021.

Mountain West states, which include Utah, continue to have some of the highest regional inflation in the country with the average prices of goods and services rising 9.9% in June, up from 9.4% in May. As a group, Western states have also seen the highest gas prices in the country, thanks in part to a dearth of of oil industry infrastructure in the region.

Big oil, big money: While COVID-19 restrictions pummeled the oil industry as recreational and business travel came to a near-standstill and remote work assignments undermined commuter fuel use, pent up demand has driven U.S. oil consumption back to pre-pandemic levels and beyond.

And that consumption, coupled with record pump prices, drove astronomic earnings for oil companies.

Some of the latest reported profits for April-June include:

British Petroleum, $8.45 billion.

Chevron, $11.62 billion.

Exxon, $17.85 billion.

Shell, $11.5 billion.

In a statement, Shell CEO Ben van Beurden recognized the impacts high prices were having on consumers in the U.S. and around the world even as his company broke its own profit record, just set in the first quarter of 2022.

“It was a turbulent quarter for the world and the global economy,” van Beurden said. “The war in Ukraine continued, destroying lives and disrupting supplies of food and energy, and aggravating the lives of so many more through high energy prices and the cost-of-living crisis.”

Consumers carrying the gas can: New survey data reveals high gas prices are having significant impacts on U.S. consumers when it comes to their driving behavior and travel decisions. According to the AAA report, almost two-thirds, 64%, of U.S. adults changed their driving habits or lifestyle since March, with 23% making “major changes.” Drivers’ top three changes to offset high gas prices, according to the survey, are driving less, combining errands and reducing shopping or dining out. 

“We know that most American drivers have made significant changes in their driving habits to cope with high gas prices,” Andrew Gross, AAA spokesperson, said in a Monday statement.

Mark Wolfe, executive director of the National Energy Assistance Directors Association, said high gas and energy prices hit low-income families and frontline workers the hardest.

“It’s devastating,” Wolfe told The Associated Press. “You live on a tight budget and this is an extra $40 to $50 per week.”

Wolfe wants the federal government to tax energy companies and “redistribute some of those profits back to the families who are struggling.”

Contributing: Associated Press