Big Oil Rewarded Shareholders Instead Of Production And Now Americans Face Record Gas Prices

Last updated on September 25th, 2023 at 09:00 pm

Big Oil chose to reward their shareholders and their CEOs after record profits, instead of funneling the money into production. Republicans blame Democrats for this and for the price of gas.

Republican outlets like Fox News and Republican officials are beating the drum of clearly misleading claims about Big Oil, blaming Democrats for Big Oil’s corporate greed.

Gouging the Little People at the Gas Pump is Republicans’ Big White Hope for 2022, and the bonus is a tidy portion of those profits go to their campaign funds.

To get more stories like this, subscribe to our newsletter The Daily.

Kevin McCarthy signaled the Republican midterm strategy way back last December, when he tweeted that high gas prices are “what happens when the government is controlled by Democrats who cancel pipelines and keep American energy buried in the ground.”

Except, that’s not even close to the real problem. The real problem is coming from the Big Oil corporations who fund the House Minority Leader and his caucus.

Press Secretary Jen Psaki pushed back on this nonsense by pointing out that the oil companies have 9,000 leases on which they are just sitting. This is the second time this has been pointed out to Fox’s Steve Doocy, so it’s a wonder he hasn’t sorted this out yet with a quick Google search. Oil and gas companies hoarded leases at the end of the Trump Error.

To answer Steve Doocy’s bewildered caping for Big Oil/Republicans, it is the oil companies themselves that have chosen not to funnel their huge profits into production, so as to be able to shovel money to shareholders, after years of the energy sector looking like a bad investment.

Chevron and Exxon Mobil, for example, reported combined net annual profits of nearly $38.6 billion after suffering $27.6 billion in combined losses in 2020.

What did they do with this windfall? Do tell us, Peter Doocy! Surely they are hot in production, which according to Republican claims brings down the price of gas (it doesn’t, supply and demand, global markets, and all of that).

It turns out after years of battered stocks – Trump’s 2020 being especially brutal for them, ironically, and while we can’t blame Trump for the pandemic, we can blame him for deliberately mismanaging it to such an extent that he lied to the public pretending it wasn’t really a problem and then seemed intent on letting people who didn’t vote for him die as punishment – the oil companies chose to pay themselves and pay their shareholders instead of reinvesting it all in production.

Financial Times reported in a piece titled: “Big Oil groups regain swagger with largest profits in years” (paywall link, emphasis mine):

Big Oil’s profits are back after a year of humiliating losses, boosting the share prices and a bit of the swagger of US supermajors that have fended off questions over their long-term prospects.

…

The profits were the highest since 2014, when crude oil prices last traded above $100 a barrel. This time, however, the majors are planning less capital spending on new production than in years past.

Instead, they are heeding investor demands to funnel cash back to shareholders, said Sam Margolin, analyst at Wolfe Research, who said the companies had pursued “self help” during the 2020 downturn.

Exxon envisages capital spending of between $21bn and $24bn this year — sharply lower than plans to spend between $30bn and $35bn a year set out by chief executive Darren Woods in 2019. Chevron plans to spend $15bn this year, down from $20bn in 2019.

Senator Bernie Sanders (I-VT) laid out that the real reason gas prices are so high is… corporate greed:

Big Oil leans solidly red and shovels money to Republicans. “Led by the oil and gas industry, this sector regularly pumps the vast majority of its campaign contributions into Republican coffers. Even as other traditionally GOP-inclined industries have shifted somewhat to the left, this sector has remained rock-solid red. Since the 1990 election cycle, more than two-thirds of this sector’s contributions to candidates and party committees has gone to Republicans,” Open Secrets reports.

Republican officials are actually crowing about low gas prices under Trump in 2020. You know, the year 385,000 Americans died from Covid-19 according to CDC data, an estimated 20 percent of Americans had no job, and small businesses were shuttered as we searched desperately for toilet paper and couldn’t test to see if we had been infected for months.

Unable to run on their record post-Trump Terrorism and Attack on The United States of America and certainly not wanting to run on plans to tax the poor and middle class, Republicans are hoping to run on anger over high gas prices and suggesting (falsely) that Democrats caring about the environment is why we are beholden to Russian oil and gas (even though the Biden administration said days ago it was in talks with our allies to ban Russian oil, and in fact Monday and Tuesday reports surfaced that President Biden was readying to do so, perhaps as soon as today (Tuesday – Update: Biden did precisely that).

Unlike the way anti-NATO Trump Republicans govern, the President is a careful and thoughtful leader who is doing his best to stop Putin without escalating the madman into a nuclear meltdown. It’s also worth noting that Republicans have been pushing Biden to ban Russian oil at the same time as they blame him for high gas prices.

It’s almost as if Republicans are hoping to push gas prices even higher in order to hurt American families so Republicans can win a midterm election. I mean, if this weren’t the case they wouldn’t be out there post Putin invasion of Ukraine wailing at full fever pitch about the price of gas; they would be saying in solidarity with Ukraine, the country their President tried to extort and illegally withheld arms from, we should all make like the Greatest Generation and stop complaining. But instead, they are inciting whining while Ukrainians fight for their lives.

Here’s the Republican Chairwoman pushing, pushing, pushing that wail:

Once again, the facts do not support the Republican claim and it’s even worse than it appears. In December of 2021, The Washington Post wrote, citing analysis shared exclusively with The Climate 202, which found “Biden is approving more oil and gas drilling permits on public lands than Trump.” (Yikes!) In fact, the Biden administration approved them at a 35% higher rate than Trump’s first year.

But the bottom line to the point at hand, changes in the federal leasing policy would have a negligible impact on gas prices:

Zibel, the author of the Public Citizen analysis, called such rhetoric “disingenuous.” He pointed to a recent report by Taxpayers for Common Sense, a nonpartisan watchdog group, which found that changes in federal leasing policy would have a negligible impact on gas prices compared to global crude oil prices and consumer demand.
“The idea that the Biden administration’s public lands policies are having a meaningful impact on oil and gasoline prices,” Zibel said, “is just not a serious argument.”

The reason for the administration approving more gas and oil permits than Trump is complex, and I invite you to click above to get into the details (Republicans sued the administration over their public lands leasing policy change, could the Biden administration be doing more?).

This is populism 101 – cape for Big Oil while raking in their donations and then whip the little people into a frenzy of rage over your greed while pointing the finger at President Joe Biden and Speaker Nancy Pelosi, who do not actually control oil and gas prices.

But never, ever point to the CEOs who are buying back shares and paying themselves and their shareholders more money than they can possibly spend, while producing less than they said they would and gouging Americans at the pump.

As Republicans can currently be found constantly pushing the high price of gas as a reason people should elect them, conveniently forgetting that it wasn’t actually long enough ago that they told people they should be willing to let Grandma die for Trump’s economy, you might be wondering why it is that they never blame the CEOs of the oil and gas companies.

Now you know.

Sarah Jones

Listen to Sarah on the PoliticusUSA Pod on The Daily newsletter podcast here.

Sarah has been credentialed to cover President Barack Obama, then VP Joe Biden, 2016 Democratic presidential candidate Hillary Clinton, and exclusively interviewed Speaker Nancy Pelosi multiple times and exclusively covered her first home appearance after the first impeachment of then President Donald Trump.

Sarah is two-time Telly award winning video producer and a member of the Society of Professional Journalists.

Connect with Sarah on Post,  Mastodon @PoliticusSarah@Journa.Host, & Twitter.