With consumers’ most cynical assumptions confirmed, a legislative showdown moves to the state house in Sacramento

By Dan Bacher

Chevron Corporation, the San Ramon based oil giant that has a historic niche around environmental devastation from the Amazon rain forest to Richmond, California, just reported its 2022 earnings of $35.5 billion. That windfall more than doubled last year’s earnings of $15.6 billion. 

Financial data also revealed that the company doubled its per-gallon profits off consumers. Additionally, Chevron reported record-high oil and gas production in the U.S., with production in the country increasing to 1.2 million barrels of oil equivalent per-day.

 “We delivered record earnings and cash flow in 2022, while increasing investments and growing U.S. production to a company record,” Mike Wirth, Chevron’s chairman and chief executive officer, gushed in a press statement. “The company’s investments increased by more than 75 percent from 2021, and annual U.S. production increased to 1.2 million barrels of oil equivalent per day, led by 16% growth in Permian Basin unconventional production.” 

Wirth went on to claim, “Again in 2022, we delivered on our financial priorities: returning cash to shareholders, investing capital efficiently, and paying down debt.”

In the fourth quarter of 2022 alone, Chevron Corporation reported earnings of $6.4 billion ($3.33 per share – diluted) compared with $5.1 billion ($2.63 per share – diluted) in fourth quarter 2021.

Consumer Watchdog offered a much different take on the record profits then Chevron, since California consumers were also hit with record prices at the gas pumps.

“West Coast refining margins were a startling 85-cents-per-gallon for 2022, doubling last year’s margin of 37 cents per gallon,” Consumer Watchdog pointed out in a statement. “Chevron historically posted average profits per gallon of 46 cents over the last 20 years and only exceeded 50 cents three times in that period—until now. Chevron’s West Coast refining margins were the largest of any of its other regions.”  

The group observed the Legislature is considering a new law, SBx12 (Skinner), to establish a windfall profits cap on how much oil refiners can make in profit per-gallon of gasoline. Consumer Watchdog has suggested that penalties kick in after 50-cents-per-gallon.

“Chevron’s profit reports are the poster child for why we need a price gouging penalty on excessive profits,” said Jamie Court, President of Consumer Watchdog. “Chevron’s pocketed billions of dollars too much off Californians’ hard earned money and made them choose between paying rent and filling up their tank. With 30% of the California market and an 85 cents per gallon profit margin, Chevron would have paid a multi-billion-dollar penalty if the price gouging penalty had been in effect and would have had to return the money to consumers.”

“Fourth quarter profits from Chevron’s refining operations alone nearly doubled to $1.18 billion over $660 million for the fourth quarter of 2021,” Court went on. “For the year, the company reported more than doubling those refining profits to $5.4 billion over $2.4 billion last year.”

Consumer Watchdog calculates profits per-gallon by dividing the reported refining margin for the year of $35.80 per-barrel by 42, the number of gallons in a barrel of oil.

“Price-gouging was at its peak in the second and third quarters of 2022,” the group revealed. “In the first quarter of 2022, Chevron made 63-cents-a-gallon on a refining margin of $26.50. Chevron raked in $1.12-per-gallon in profits in the second quarter on a refining margin of $47.03 per barrel. It collected 95-cents-a-gallon in the third quarter on a refining margin of $39.99. In the fourth quarter, the gouging lessened to 70 cents on a refining margin of $29.58—still an unacceptable level.”

Consumer advocate Liza Tucker also sees a need for action from the state.

“The price gouging penalty under consideration by California lawmakers will go hand-in-hand with those reporting requirements and is vital to enact,” Tucker contended. “This is a way to get a handle on the gouging practically as it is happening and apply a penalty whenever companies exceed 50 cents per gallon profit—a level that affords them plenty of earnings without affecting the supply of crude oil or gasoline.” 

Tucker added that Marathon and Phillips 66 will report their year-end earnings next week and PBF Energy reports in mid-February.

The news of Chevron’s record oil and gas production in the U.S. comes as Ben Adler of Yahoo News reports that data from the Bureau of Land Management “shows that President Biden approved more oil and gas drilling permits in his first two years in office than former President Donald Trump.” 

“From Jan. 20, 2021, to Jan. 19 of this year, the BLM approved 6,430 permits for oil or gas drilling on federal land, compared with 6,172 drilling permits approved during the first two years of the Trump administration,” Adler wrote.