Record Breaking Profits

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As reported by Rystad last week, public E&P [exploration and production] firms are on track to shatter previous record profits this year as high oil and gas prices and surging demand drive financial success. According to the energy intelligence firm, companies’ cash from operations after accounting for outflows and asset maintenance – total free cash flow (FCF) – will balloon to $834 billion from the $493 billion profits in 2021.

Espen Erlingsen, Rystad Energy’s head of upstream research, remarked: “The current financial health of public upstream operators is at an all-time high. Still, the good times are set to get even better this year, thanks to a perfect storm of factors pushing profits and cash flow to another record high in 2022.”

Based on Rystad’s research, the main contributing factor to these glowing financials is sustained high oil and gas prices. The energy intelligence group predicts that total FCF for public upstream companies will reach $834 billion this year thanks to average Brent oil prices estimated at $111 per barrel in 2022, a Henry Hub gas price at $4.2 per thousand cubic feet (Mcf) and a European gas price of $25 per Mcf.

However, the research shows that record high FCF is not the only thing on the table for public upstream operators as cash from operations is also expected to rocket this year, breaking the $1 trillion threshold for the first time. The $1.1 trillion projected annual total is a 56 per cent jump from 2021 levels of $719 billion, which was the highest yearly total since 2014.
 
Fake shortages and fake supply-chain issues are always good for producers' bottom lines. The commodity doesn't matter. Also, Exxon, Shell, etc., aren't paying world sweet-crude prices for oil, since they're extracting the oil themselves from their own fields at much less than a dollar per gallon.
 
Fake shortages and fake supply-chain issues are always good for producers' bottom lines. The commodity doesn't matter. Also, Exxon, Shell, etc., aren't paying world sweet-crude prices for oil, since they're extracting the oil themselves from their own fields at much less than a dollar per gallon.
Nothing fake about it
 
Nothing fake about it
The supply chain issues are certainly for real. The supply chain is manufacture and transport of materials. But supply chain issues are not the key driver of gas prices. Profits are. Don't get me wrong, I am a capitalist. I have zero problem with a for-profit company doing well; that's what they are in business for. Gas prices are inelastic; consumption does not highly vary with price.
 
The supply chain issues are certainly for real. The supply chain is manufacture and transport of materials. But supply chain issues are not the key driver of gas prices. Profits are. Don't get me wrong, I am a capitalist. I have zero problem with a for-profit company doing well; that's what they are in business for. Gas prices are inelastic; consumption does not highly vary with price.
Yes profit is part of it but remember the fuel is bought and sold with futures contracts (guarantee delivery of X amount at Y price on Z date). Volatile events around the globe increase uncertainty which drives up energy prices.
There is a political component since a huge portion of global supply is under de-facto govt control and if that govt isn't happy with how they're being treated by the West they will not increase production to ease supply.

Finally this is a commodity which is bought and sold globally. There's no such thing as "US prices" vs "Everyone else" prices.

Nobody has the right to buy gas at $X price. Even oil rich countries pay the global price when they subsidize their domestic fixed pricing schemes.
 
There are years the oil companies don't do so well. No one complains then.
 
Yes profit is part of it but remember the fuel is bought and sold with futures contracts (guarantee delivery of X amount at Y price on Z date). Volatile events around the globe increase uncertainty which drives up energy prices.
There is a political component since a huge portion of global supply is under de-facto govt control and if that govt isn't happy with how they're being treated by the West they will not increase production to ease supply.

Finally this is a commodity which is bought and sold globally. There's no such thing as "US prices" vs "Everyone else" prices.

Nobody has the right to buy gas at $X price. Even oil rich countries pay the global price when they subsidize their domestic fixed pricing schemes.
I basically agree, but blaming gas prices on the supply chain problems is simply wrong. That's what I'm saying.
There is no shortage; gas stations have plenty of fuel for us to buy. And I am playing as much as $6 per gallon.
 
I have much more of an issue of where the tax paid upon the final product goes than the profit of companies actually pumping and refining the product - after all they do the work, its the profit and mis-spend from doing nothing on their labor I have an issue with.
 
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The global market sets the price of crude and refined products. The global market is uncertain about future supply of both crude and refined, hence the high prices. The high profits of the refiners is a by-product of high market prices, the refiners don't set the price we pay at the pump, that's just magical thinking.
 
Don't forget about the chip-chirip shortage. You ain't allowed to have your heated seats in your $75K Escalade no more, but you're paying $95K for it now, plus $7K in dealer-installed accessories. 🤣

The global market sets the price of crude and refined products. The global market is uncertain about future supply of both crude and refined, hence the high prices. The high profits of the refiners is a by-product of high market prices, the refiners don't set the price we pay at the pump, that's just magical thinking.
The high fuel prices are due to out-of-control inflation. It doesn't matter to me how much profit the oil companies make, I want my cheap gas, please. Thank you.
 
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