The Strategist

U.S. oil companies make $200B on rising energy prices

11/07/2022 - 13:54

In the second and third quarters, U.S. public businesses engaged in oil production and refining had a combined profit of $200.2 billion, according to S&P Global Commodity Insights estimates for the Financial Times.

The record gains, according to the experts, are the result of rising oil prices brought on by heightened geopolitical unrest as a result of the military conflict in Ukraine. S&P's oil market analysis team expects that operating free cash flows will be record-breaking or very near to it by the end of the year.

The government of several nations already wants to levy higher taxes on oil firms as a result of their excessive earnings. Beginning in September, word spread that the European Commission is considering introduction of a new tax on the surplus profits of energy corporations. The EU authorities plan to offset rising energy prices this year with money from these tariffs.

Some experts point out that oil corporations won't keep all of their mega profits; instead, they'll utilize it to increase shareholder dividends or make capital investments. The 50 largest oil corporations in the world will set aside up to $300 billion for capital investments this year, according to estimations made by investment firm Raymond James.

The management of Shell (Great Britain), which doubled its third-quarter net profit to $9.5 billion, announced at the end of October that it planned to increase dividends per share by roughly 15% in the fourth quarter of this year, with a payment in March 2023.