The fossil fuel industry experienced a boom in profits during the first nine months of 2021, raking in tens of billions of dollars as Americans faced a jump in gas prices.
A new report by Accountable.US shows that 24 top oil and gas companies made $174 billion in profits between January and September, lining shareholders’ and CEOs’ pockets. Sixteen of those companies raised their dividend at least once in 2021, the report found, and most of their CEOs had compensation packages of over $10 million.
Companies like Exxon and Chevron have posted high profits in the third quarter of 2021; in just four months, the 24 companies made $74 billion in profits. Exxon alone reported making $6.9 billion in the third quarter, a 60 percent increase in revenue from the same time last year and its highest profits for four years.
Meanwhile, gas prices have hit a seven-year high during the third quarter especially, increasing by 50 percent in just a year — amounting to an average of $3.40 per gallon in the U.S. — even as wholesale prices have gone down. This has helped pad profits for the oil and gas companies as increased demand drives higher gas prices after pandemic restrictions have been lifted.
Critics of the oil and gas industry say that the high gas prices are by design, as oil and gas companies haven’t been replenishing fuel supplies to meet high demand. Conservative politicians have deceptively tried to blame high gas prices on President Joe Biden’s climate policies, despite the fact that the president’s climate approach has been tepid at best. But sustainable energy groups like the International Energy Agency have said that high prices are thanks to “the deliberate policies of energy producers.”
From a climate perspective, more oil and gas production is not to be cheered — but the oil and gas industry has little incentive to shrink the fuel supply due to the climate crisis, and wouldn’t raise prices for that reason. Instead, the industry is likely manipulating costs because gas prices typically have little effect on demand and are not likely to drive down usage. This also means that middle- and- lower-income people with few alternatives for transportation will be hurt the most by these prices, as they continue to experience high levels of hardship nearly two years into the pandemic.
“As Americans make sacrifices to cover high gas prices, oil and gas corporations are raking in billions that they then use to shower mega-rich CEOs and shareholders with more money,” Accountable.US wrote in its report. “Rather than increase production or reinvest to meet the energy demand increase caused by the world reemerging from COVID-19 lockdowns, oil and gas companies are taking advantage of bloated prices, fleecing American families along the way.”
The Biden administration has taken note of oil and gas companies’ increased profits. “[T]he oil and gas companies are not flipping the switch as quickly as the demand requires,” Energy Secretary Jennifer Granholm said.
Last month, Biden asked the Federal Trade Commission to examine potential “anti-consumer behavior” by the industry, pointing out the discrepancy between high prices and low wholesale costs. “This unexplained large gap between the price of unfinished gasoline and the average price at the pump is well above the pre-pandemic average,” he wrote.
The industry’s actions regarding natural gas prices also lend credence to the idea that the companies are acting deliberately to pad their pockets. Recent reporting found that energy companies were exporting record amounts of natural gas while limiting supply domestically ahead of the winter, as utilities are stocking up. Gas bills are projected to rise to 30 percent higher than last year, according to the U.S. Energy Information Administration.
Sen. Elizabeth Warren (D-Massachusetts) pushed energy companies to explain their exporting practices last month, criticizing their “corporate greed.”
“The cause of rapidly rising energy prices for consumers and manufacturers is clear: some of the nation’s largest and most profitable oil and gas companies are putting their massive profits, share prices and dividends for investors, and millions of dollars in CEO pay and bonuses ahead of the needs of American consumers and the nation’s recovery from the pandemic,” Warren wrote in a letter to the nation’s largest natural gas producers.
The oil and gas industry isn’t the only industry taking advantage of the American public to pad their pockets during this time of economic turmoil. Corporations have seen huge increases in profits this year, which consumer advocates say is because companies are exploiting media cycles about inflation to raise prices precipitously.
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