The Spark

the Voice of
The Communist League of Revolutionary Workers–Internationalist

“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx

The Oil Company Cash Machine

Mar 14, 2022

In his speech announcing the U.S. ban on the import of Russian oil, President Joe Biden blamed the outrageous oil and gas price increases on Putin and the war in Ukraine.

These are complete lies. There has been no drop in oil and gas supplies on the world market since the war broke out. Nor will the U.S. ban on Russian imports have any impact on oil supplies in the U.S., since Russian imports into the U.S. represent less than one percent of all the crude oil processed by U.S. refineries.

No, the war in Ukraine and the U.S. ban on Russian oil are being used as an excuse for the big oil companies to impose price increases. And those price increases come on top of the price increases they already had imposed long before there was any war in Ukraine. In the last year, the oil companies had already jacked up prices by as much as 50%, according to the latest official inflation figures.

And the oil companies have laughed all the way to the bank. One study found that in the first nine months of 2021, the top 24 oil companies in the world, including Exxon, Chevron, Shell and BP, made 174 billion dollars in profits … after taxes!

Those profits were not reinvested in production of oil or alternative fuels—since the oil companies’ rate of productive investment is at record lows. Instead, the oil companies funneled almost all that money to their major stockholders through dividends, while expanding programs for oil companies to buy back their own stock—which is a way for companies to increase their share prices.

And while politicians like Biden shed crocodile tears about the price increases, oil company executives have bragged to their investors about the riches they are handing to them.

“I expect 2022 will be even better for cash returns to shareholders with another dividend increase announced this week and first quarter buybacks projected.… We’re optimistic about the future, focused on continuing to reward our shareholders ...” said Chevron CEO Mike Wirth to investors.

The chief financial officer of British Petroleum (BP), Murray Auchincloss, told investors in late February: “It’s possible that we’re getting more cash than we know what to do with.”

This flood of money has led to enormous stock market gains. In the first two months of 2022, Chevron shares rose by more than 40%, ExxonMobil increased by about 35%, and Marathon Oil increased by 40%. As for Occidental Petroleum, a favorite stock of billionaire Warren Buffett, its stock price has doubled in the first two months of 2022! And once Russia invaded Ukraine, Occidental’s stock price rose by 50% in less than two weeks!

Other corporate sectors, besides the traditional oil and gas companies, have also benefited greatly. Oil tanker stocks, for example, have surged by double-digits in 2022. Companies such as International Seaways and Frontline have both seen their stocks rise nearly 40% since the start of 2021.

So, while the war rages and people die and flee, while working people all over the world struggle to pay their bills, the war will greatly enrich the capitalist class, as oil companies coin record profits and use those profits to fatten the wealth of their big capitalist investors.