US President Joe Biden speaks at the opening plenary session of the Ninth Summit of the United States in Los Angeles, California, USA, June 9, 2022. REUTERS / Daniel Becerril
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LOS ANGELES, June 10 (Reuters) – US President Joe Biden on Friday accused the US oil industry and in particular Exxon Mobil Corp (XOM.N) of taking advantage of supply shortages to increase profits after a report showed that inflation rose to a new 40-year record.
Consumer inflation in the United States accelerated in May as gasoline prices reached record highs and food prices soared, leading to the largest annual increase in four decades. One gallon of regular gasoline cost an average of $ 4.99 nationwide on Friday, according to the AAA group of motorists.
Biden, who took office promising to reduce US dependence on fossil fuels, said on Friday that he hoped to accelerate oil production, which is expected to reach record levels in the United States next year.
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But he also warned the industry, whose profits have soared with oil and gas prices, citing profits as proof that consumers are paying more than higher labor and delivery costs.
“Exxon made more money than God this year,” Biden told reporters after a speech to dockers’ unions in the port of Los Angeles. U.S. oil companies are not using higher profits to drill more, but to buy back shares, he added.
Repurchase of shares improves earnings per share by reducing the number of shares outstanding, indirectly helping to increase share prices. Companies see buyouts as a way to reward investors.
“Why don’t they break through?” “Because they make more money, not more oil,” Biden said. “Exxon, start investing and start paying your taxes.”
Exxon dismissed comments, noting that it continues to increase its oil, gasoline and diesel production in the United States and has taken serious loans to increase production while suffering losses in 2020.
“We are in regular contact with the administration, informing them of our planned investments to increase production and expand refining capacity in the United States,” said spokeswoman Casey Norton.
Exxon will increase costs by 50 percent in its shale reserves in West Texas, he said, where he expects to add 25 percent more this year after adding 190,000 barrels to oil production last year. The ongoing expansion of the Texas refinery will add the equivalent of a “new medium-sized refinery,” Norton said.
Exxon, the largest oil producer in the United States, lost about $ 20 billion in 2020 and borrowed more than $ 30 billion to fund operations. He paid $ 40.6 billion in taxes last year, $ 17.8 billion more than in 2020, he said.
The president was speaking during a visit to the port of Los Angeles, where he defended his economic record and job creation and diverted blame for inflation, which rose 8.6 percent in the year to May, according to a new report from the Labor Ministry.
At a Democratic fundraising event in Beverly Hills that evening, Biden was cautious about the prospects for inflation: “We will live with this inflation for a while,” he said. “It will gradually decrease, but we will live with it for a while.”
Earlier, Biden criticized the US oil, gas and refining industries for using “the challenge posed by the war in Ukraine as a reason to make things worse for families with excessive profits or price increases.”
Exxon reported its biggest quarterly profit in seven years when it reported its fourth-quarter profit in February. After stopping the redemption of shares a few years ago, he resumed them this year and promised to spend up to $ 30 billion next year.
A number of companies have said they are holding back costs that could increase oil production to lower oil prices of more than $ 100 a barrel because investors are demanding it. Read more
Rising costs have become a political headache for the Biden administration, which has tried several measures to reduce prices. These include a record release of barrels from US strategic reserves, waivers of rules on summer gasoline production, and reliance on major OPEC countries to increase production.
In a speech Friday, Biden called on Congress to pass legislation to reduce energy costs, prescription drugs and supplies.
The shipping companies have made a profit of $ 190 billion, a sevenfold increase in one year, Biden told the port. The situation angered him so “viscerally” that he wanted to “care” about them, he said.
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Report by David Gaffen in New York, Kanishka Singh in Washington; edited by Heather Timmons, John Stone Street, Richard Chang and Kim Coghill
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