Here’s What’s Really Behind Skyrocketing Gas Prices

Gas and oil prices are rising astronomically for Americans. 

You’ve probably heard that these record high gas prices are Joe Biden’s fault:

“These aren’t Putin’s price hikes,” Republican Rep. Kevin McCarthy (R-Calif.) said. “They’re President Biden’s.”

Republican Sen. John Barrasso (R-Wyo.) argued, “Joe Biden, with his very weak policies and his policies to undermine American energy essentially named Vladimir Putin as his secretary of energy.”

You may have heard that prices would be lower if we hadn’t canceled the Keystone pipeline.

Former Vice President Mike Pence claimed recently, “But from very early on, with killing the Keystone pipeline, taking federal lands off the list for exploration, sidelining leases for oil and natural gas — once again, before Ukraine ever happened, we saw rising gasoline prices.”

Or you may have heard that rising prices simply can’t be stopped unless Russia halts its invasion.

Somehow fossil fuel companies – which are all making record profits – have avoided any blame in this crisis.

We monitored corporate earnings calls, searched through corporate financial reports, and dug into the oil giants’ history with Putin. And we found some startling evidence of what’s really behind skyrocketing gas prices.

Oil and gas executives, who have been some of Vladimir Putin’s closest partners for years, are cashing in on Russia’s war and using it to boost their bottom line at the expense of working class Americans.

Let us explain.

Even before Russia invaded Ukraine, Big Oil giants Shell, Chevron, BP, and Exxon were taking advantage of inflated prices to make a combined $75.5 billion in profits. 

“Now extraordinary times call for extraordinary measures and we made 2021 a momentous year for Shell,” Shell CEO Ben van Beurden said recently.

In 2021, while Americans were struggling to pay gas bills and other basic necessities, fossil fuel CEOs were celebrating their biggest profit increases in at least seven years.

“We have more cash than we know what to do with,” Murray Auchincloss, BP Chief Financial Officer told investors.

On a recent earnings call, Shell told stockholders, “Our Adjusted Earnings were some $19 billion for the year.”

“We expect to generate over $100 billion in excess cash,” Exxon Mobil CFO Kathy Mikells said during an investor presentation in March.

Chevron is also making record profits: “By the end of 2021, we had one of our most successful years ever… “Full year earnings were over $15 billion, the highest since 2014.”

You would think that record profits would mean oil companies are ramping up domestic production to weather the storm after America banned Russian oil imports.

But oil companies have no intention of increasing production. The CEO of British Petroleum himself said in an investor call last year that oil and gas companies have more than enough leases and drilling permits.

BP CEO Bernard Looney told investors in February, “We’ve got enough sort of permits to do what we need to do.”

Instead, Big Oil companies have actually been restricting production to maximize cash profits for investors. 

When Pioneer Natural Resources CEO Scott Sheffield was asked if “the industry have an obligation to pump more oil,” his answer was clear: “No. obviously not…we’re just going to return more cash back to the investor.”

And this strategy has been working. Since 2015, U.S. oil giants ConocoPhillips, Chevron, Devon Energy, Exxon Mobil and Hess have paid out “$200 billion to shareholders in dividends and stock buybacks.” That’s more than double the amount they have paid to the US and foreign governments in taxes. 

“As a result of our restored financial strength we increased the annual dividend for the 39th consecutive year and announced a 10 billion dollar share repurchase program.” Exxon told investors.

“Our record free cash flow enabled us to strongly address all four of our financial priorities in 2021: a higher dividend for the 34th consecutive year…and another year of share buybacks.” Chevron’s CFO said.

“Clearly if prices are higher there are and is the opportunity for increased buybacks.” BP’s CEO proclaimed.

This year, Big Oil is on track to send a near-record $88 billion back to shareholders through buybacks and dividends – that’s nearly double the stock buybacks completed in 2014.

Oil executives are lining their own pockets, too. Since the build up to Russia’s invasion of Ukraine, just 5 CEOS of major oil companies have made $99 million dollars from selling their shares.

But the war in Ukraine isn’t just a cash cow for Big Oil – it’s actually a crisis that fossil fuel executives helped create in the first place.

Oil companies like Exxon Mobil may be announcing that they’re halting oil production in Russia now, but Exxon and other US-based fossil fuel giants have worked closely with Russian President Vladmir Putin for years to lobby against U.S. sanctions on Russia, violate sanctions to work with Putin’s allies, and block solutions that would have reduced the world’s dependence on Russian oil and gas.

In 2011, Exxon struck a major deal with Rosneft, Russia’s state-owned oil company, expanding production in the Russian Arctic and giving Rosneft access to oil and gas in the United States. The deal was so important to Russia that Putin attended the signing ceremony himself. 

Two years later, Vladimir Putin awarded ExxonMobil CEO Rex Tillerson (and future secretary of state) the Order of Friendship, one of the highest honors Russia gives to foreign citizens.

When Russia first invaded Ukraine in 2014, instead of pulling out of the project, Exxon lobbied Congress, State Department and Treasury to delay sanctions until they could finish drilling. 

An Exxon lobbyist was caught on camera saying, “We had a friends who happened to be chair of a very powerful committee who was able to step in front of this, what we called the runaway train and was able to use a political maneuver to slow it down.”

Exxon knowingly violated sanctions on Russia to work with Russian state-owned oil company Rosneft on oil and gas projects.

And Exxon is not an outlier. Shell and BP work with Putin-controlled oil and gas companies Rosneft and Gazprom and Chevron has a 15% stake in the Russian-owned Caspian pipeline. Valero is one of the largest importers of Russian oil along with Exxon.

The same fossil fuel executives that got us into this mess are not the ones who can get us out of it.

Fossil fuel companies want you to think the only way to stop Russia is to increase domestic production, but in fact we need to do exactly the opposite and move away from fossil fuels entirely. 

Thankfully there’s an energy source that hasn’t been impacted at all by Russia’s war in Ukraine and that’s wind, solar and green energy.

In a recent speech, President Joe Biden declared, “Loosening environmental regulations or pulling back clean energy investment won’t — let me explain — won’t — will not lower energy prices for families. But transforming our economy to run on electric vehicles powered by clean energy with tax credits to help American families winterize their homes and use less energy, that will — that will help. And if we can — if we do what we can, it will mean that no one has to worry about the price at the gas pump in the future.”

We need a radical transition to clean energy that doesn’t leave the US economy vulnerable to foreign dictators like Putin or petro-oligarchs in our own country.

And in the meantime we also need a tax on windfall oil profits, to stop price gouging by oil and gas corporations and provide Americans immediate relief at the gas station. 

The windfall profits tax introduced by Senator Sheldon Whitehouse (D-RI) and 11 other Senate Democrats would take fossil fuel companies’ excess profits and actually return that money directly to working Americans via monthly checks.

“Look we get it, supply and demand, that prices go up,” Sen. Elizabeth Warren (D-Mass.) told MSNBC. “But profit margins should not go up. That’s just oil companies gouging.”