Oil giants' massive profits revive calls for windfall taxes

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By Sabrina Valle and Ron Bousso

(Reuters) - Global energy giants including Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) posted another round of huge profits, benefiting from surging energy prices that have boosted inflation around the world and led to fresh calls to further tax the sector.

Oil companies booked billions of dollars in profits in the third quarter as prices for crude, natural gas and fuels like gasoline hovered near record levels, lifted by tight global markets and disruption following Moscow's invasion of Ukraine.

The sheer size of the profits has revived calls from politicians and consumer groups to impose more taxes on the companies to raise funds to offset the hit to households, businesses and the wider economy from higher energy costs.

Chevron Chief Financial Officer Pierre Breber warned in an interview with Reuters that "taxing production will just reduce it". The company reported its second-highest profit of $11.2 billion.

"If you raise the costs on energy producers, it will decrease investment so that goes against the intent of increasing suppliers and making energy more affordable."

U.S. President Joe Biden, who earlier this year said Exxon was making "more money than God", told oil companies this month that they were not doing enough to bring down energy costs.

Hours after Shell (LON:RDSa) reported a quarterly profit of $9.45 billion and raised its dividend by 15% on Thursday, Biden said the company was misusing its profits.

On Friday, he noted on Twitter in response to a comment from Exxon's CEO that "giving profits to shareholders is not the same as bringing prices down for American families".

However, Shell CEO Ben Van Beurden has said the energy industry "should be prepared and accept" that it will face higher taxes to help struggling parts of society.

Shell is well on track to surpass its record annual profit of $31 billion set in 2008.

In the UK, the president of the COP26 climate summit Alok Sharma said on Friday that Prime Minister Rishi Sunak's government should explore extending a windfall tax on oil and gas firms.

"These are excessive profits, and they have to be treated in the appropriate way when it comes to taxation," Sharma said.

U.S. lawmakers have also criticized the big oil companies for not doing more to raise production more swiftly to offset rising costs to heat homes and fill the gas tank.

GRAPHIC - Big Oil's big profits

https://graphics.reuters.com/OILMAJORS-RESULTS/xmvjkgbzopr/chart.png

WINDFALL

Exxon Mobil, the largest U.S. major, reported nearly $20 billion in net income in the quarter ending in September, exceeding expectations and surpassing its previous record set just three months earlier.

Exxon, which led record gains by the five producers known as the oil majors in the second quarter, far surpassed peers Shell and TotalEnergies with third-quarter profit almost twice as big. Its gains were aided by its highly criticized decision to double down on fossil fuels as European competitors shifted to renewable investments.

"Where others pulled back in the face of uncertainty and a historic slowdown, retreating and retrenching, this company moved forward, continuing to invest," Exxon CEO Darren Woods said.

Chevron's global production of 3.1 million barrels of oil equivalent per day (boed) for all of 2022 so far is actually down by about 100,000 boed from the same time a year ago.

European governments have scrambled to fill gas storage after Russia cut off most of its natural gas exports to the continent, its primary customer.

In Europe this week, France's TotalEnergies reported a record profit of $10 billion, Norway's Equinor also broke new ground helped by the all-time high in European gas prices, and Italy's Eni nearly tripled its profit from a year ago, beating the consensus with earnings of 3.73 billion euros ($3.72 billion).

"The Russian war in Ukraine has changed the energy markets, reduced energy availability and increased prices," Equinor Chief Executive Anders Opedal said in a statement.