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Big oil saw big profits in 2022


ExxonMobil just announced its biggest annual profit in history. In fact, it is the biggest annual profit for any U.S. or European oil company ever. It's all, of course, connected to gas prices, the climate and the politics surrounding both. NPR's Camila Domonoske joins us now to explain. Hey, Camila.


CHANG: So I don't think anybody is surprised that the oil industry made a lot of money. But exactly how much money are we talking about here?

DOMONOSKE: We're talking about almost $56 billion.


DOMONOSKE: And, yeah, it may not be a surprise, but it is really a comeback story because the oil industry and especially Exxon crashed hard after the beginning of the pandemic. And now, clearly, it's back. I mean, last year was just remarkable for the oil industry. Prices were high. Russia's invasion of Ukraine was a really big part of it, and that just boosted profits across the entire sector.

CHANG: OK. So I'm curious. What's Exxon doing with all of that money?

DOMONOSKE: Well, a lot of it is going back to shareholders. And that means big paydays for investment firms and for executives. But, you know, it's not just Wall Street. Exxon is a very popular stock for retirement accounts. So for listeners, unless you went out of your way to avoid oil in your portfolio, you might be getting some of that cash. And there's actually a really important shift that's going on here. In the past, when oil companies made boatloads of money, they would spend a lot of that money on drilling new wells to make more oil. But right now oil companies are putting a little less money on drilling and sending tremendous amounts of money right back to investors. That means a little less oil, which helps - there's lots of factors - helps keep oil prices high, keeps profits up, and it keeps investors happy.

CHANG: Yeah, investors. But, I mean, drivers are not happy about high gasoline prices. So is anyone pushing back on oil companies over these profits?

DOMONOSKE: Oh, yeah. President Biden called oil profits a windfall of war last year. The White House just released a statement chewing oil companies out for sending money to shareholders instead of producing more. In Europe, they actually passed windfall taxes, which are taking a chunk of profits and sending it to households. Exxon is actually suing over that. And you might say, hey; the company can clearly afford to, you know, throw $2 billion to the people of Europe. But here's Exxon's chief financial officer, Kathy Mikells.

KATHY MIKELLS: It's the opposite of what is needed, right? So what's needed right now is more supply. And instead, what's been put in place is a penalty, you know, on the broad energy sectors.

DOMONOSKE: So this is the oil industry's response to these taxes - says, look. If you think prices are too high, then you want us to pump more oil. Clearly, we're not drilling as much as we could be. But if you tax us, we might decide to pump even less.

CHANG: Wait. But then that raises the question, do politicians want more oil? I mean, aren't they also worried about climate change?

DOMONOSKE: Yeah. Both of those things are true. It's definitely a source of tension. I mean, take Biden. He definitely wants companies to pump more oil to bring prices down because the world is dependent on oil. Oil powers the global economy. But over time, world leaders want less oil. They want to shift to electric vehicles and heat pumps and clean energy because burning fossil fuels is causing catastrophic climate change, right?

CHANG: Right.

DOMONOSKE: The big question is, when you say, over time, we'll use less oil, how much time are we talking? Climate advocates say it needs to be a transition that happens as quickly as possible to reduce damage to the planet and to ourselves. The oil industry is in no hurry. As these earnings show, selling oil remains incredibly profitable.

CHANG: Indeed. That is NPR's Camila Domonoske. Thank you so much, Camila.

DOMONOSKE: Thank you.


Camila Domonoske
Camila Flamiano Domonoske covers cars, energy and the future of mobility for NPR's Business Desk.