Facing record inflation, Biden chides Exxon, oil companies for profits

U.S. President Joe Biden speaks throughout the opening plenary session on the Ninth Summit of the Americas in Los Angeles, California, U.S., June 9, 2022. REUTERS/Daniel Becerril

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LOS ANGELES, June 10 (Reuters) – U.S. President Joe Biden on Friday accused the U.S. oil business, and Exxon Mobil Corp (XOM.N) particularly, of capitalizing on a provide scarcity to fatten income after a report confirmed inflation surging to a brand new 40-year report.

U.S. shopper inflation accelerated in Might as gasoline costs hit a report excessive and the price of meals soared, resulting in the biggest annual enhance in 4 a long time. A gallon of normal gasoline value a median $4.99 nationwide on Friday, based on motorist group AAA.

Biden, who got here into workplace vowing to scale back U.S. dependence on fossil fuels, mentioned on Friday he hoped to hurry up oil manufacturing, which is predicted to hit report highs in america subsequent 12 months.

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However he additionally issued a warning to the business, whose income have jumped with oil and fuel costs, pointing to the features as proof customers are paying for greater than larger labor and transport prices.

“Exxon made more cash than God this 12 months,” Biden instructed reporters following a speech to dockworker union representatives on the Port of Los Angeles. U.S. oil firms will not be utilizing larger income to drill extra however to purchase again inventory, he added.

Share buybacks enhance earnings per share by decreasing the variety of shares excellent, not directly serving to to spice up share costs. Firms see buybacks as a solution to reward traders.

“Why aren’t they drilling? As a result of they make more cash not producing extra oil,” Biden mentioned. “Exxon, begin investing and begin paying your taxes.”

Exxon pushed again on the feedback, noting it has continued to extend its U.S. oil, gasoline and diesel manufacturing, and had borrowed closely to extend output whereas struggling losses in 2020.

“We now have been in common contact with the administration, informing them of our deliberate investments to extend manufacturing and increase refining capability in america,” mentioned spokesman Casey Norton.

Exxon will hike spending 50% in its West Texas shale holdings, he mentioned, the place it expects so as to add 25% extra output this 12 months after including 190,000 barrels to grease manufacturing final 12 months. An ongoing Texas refinery enlargement will add the equal of a “new medium sized refinery,” mentioned Norton.

Exxon, the biggest U.S. oil producer, misplaced some $20 billion in 2020, and had borrowed greater than $30 billion to finance operations. It paid $40.6 billion in taxes final 12 months, $17.8 billion greater than in 2020, he mentioned.

The president spoke throughout a go to to the Port of Los Angeles, the place he defended his financial and job creation report and deflected blame for inflation, which spiked 8.6% within the 12 months to Might based on a brand new Labor Division report.

In a Democratic marketing campaign fundraising occasion in Beverly Hills that night, Biden sounded a cautious tone in regards to the prospects for inflation going ahead: “We’re gonna dwell with this inflation for some time,” he mentioned. “It is gonna come down step by step, however we’ll dwell with it for some time.”

Biden earlier had chided U.S. oil, fuel and refining industries for utilizing “the problem created by the conflict in Ukraine as a cause to make issues worse for households with extreme profit-taking or value hikes.”

Exxon posted its greatest quarterly revenue in seven years when it reported fourth-quarter earnings in February. After halting share buybacks a number of years in the past, it resumed them this 12 months and pledged to spend as much as $30 billion by means of subsequent 12 months.

Quite a few firms have mentioned they’re holding down spending that would increase oil output to decrease $100-plus per barrel oil costs, as a result of that’s what traders are demanding. learn extra

The surging prices have develop into a political headache for the Biden administration, which has tried a number of measures to decrease costs. These embrace a report launch of barrels from U.S. strategic reserves, waivers on guidelines associated to the manufacturing of summer time gasoline, and leaning on main OPEC international locations to spice up output.

Biden in his Friday remarks urged Congress to go laws to chop power, prescribed drugs and transport prices.

Delivery firms made $190 billion in revenue, a seven-fold enhance in a single 12 months, Biden mentioned on the port. The scenario made him so “viscerally offended” that he wished to “pop them,” he mentioned.