As America’s oil giants gear up for what could be their most lucrative quarter in years, President Donald Trump is ramping up his calls for lower gas prices just ahead of the critical midterm elections. The stakes are high, and the pressure is mounting as drivers continue to feel the pinch at the pump.
Recent reports suggest that Exxon Mobil and Chevron are on track to announce second-quarter profits that could soar more than threefold compared to the first quarter. This surge is largely attributed to rising crude oil prices, a situation exacerbated by the ongoing US-Israeli tensions with Iran that have shaken global energy markets.
Analysts from LSEG predict that Exxon could report an impressive adjusted net income of approximately $15.9 billion, while Chevron is expected to follow closely with around $9.9 billion. Such eye-popping figures could stir political challenges for the Biden administration, which has been vocal about its commitment to lowering fuel costs amid ongoing consumer frustration.
In a June 29 social media post, Trump emphasized the urgency, declaring, “Gasoline Retailers must get their Prices down, IMMEDIATELY!” Despite a recent retreat in benchmark crude prices, gasoline remains stubbornly high, leaving many consumers bewildered.
Experts point to a variety of factors contributing to this disconnect, including tight fuel inventories, strong demand for exports, and soaring refining margins. The Justice Department has also stepped up scrutiny of the oil industry, investigating potential price gouging practices.
Treasury Secretary Scott Bessent has warned that further administrative actions could be on the table if retail prices do not decrease soon. Meanwhile, oil industry lobbyists are actively engaging with lawmakers to address the growing discontent over fuel prices.
Executives within the oil sector argue that their control over consumer prices is limited. They highlight that refining costs, transportation, marketing, and taxes play significant roles in determining what drivers pay at the pump. Trade associations are echoing this sentiment, asserting that gasoline prices are influenced by a myriad of factors beyond just crude oil costs.
“Gasoline prices don’t move in lockstep with crude oil, especially during a major global disruption affecting supply, refining, and inventories,” noted Bethany Williams, a spokesperson for the American Petroleum Institute.
With analysts expecting this quarter to yield the best results for the industry since the energy market upheaval following Russia’s invasion of Ukraine, much of the anticipated growth is driven by a resurgence in refining profitability. According to energy advisory firm TPH, gasoline refining margins averaged around $25 per barrel, while diesel margins reached approximately $45 per barrel, marking their highest levels since mid-2022.
As the frustration among motorists continues, analysts at BMO Capital Markets suggest that major oil companies may prioritize shareholder returns through stock buybacks over increasing production. Industry leaders maintain that profit fluctuations are a natural part of market cycles, often following periods of substantial risk during downturns.
With the oil industry standing at a crossroads, how will these developments impact the everyday consumer? The conversation is just beginning.
