Comment LONDON — BP reported second-quarter profit of $8.5 billion on Tuesday, its highest in 14 years, making it the latest oil giant to cash in on higher crude prices as Russia’s war in Ukraine has roiled global energy markets. A few days earlier, the two biggest US oil companies – ExxonMobil and Chevron – reported that profits had roughly tripled in the second quarter, while London-based Shell and France’s TotalEnergies also reported strong results. Total second-quarter profits for Western oil companies are now more than $55 billion, marking a stunning recovery from the early months of the coronavirus pandemic. The unexpected comes as Consumers around the world are feeling the pain of decades of high inflation and a cost-of-living crisis that’s especially painful at the gas pump. The price of crude oil soared above $120 a barrel in March and again in June before retreating, and remains 34% higher than a year ago. The national average price of natural gas in the United States jumped in tandem, to above $5 a gallon for the first time, AAA said, although prices are now falling. President Biden has warned the industry that he is considering all options to limit their profits if natural gas prices remain high. The president and other Democrats have consistently railed against oil industry profits at a time when drivers are struggling to make ends meet. While Biden’s tools are limited — there isn’t enough support from Congress to advance his plan for a windfall tax — that could change if he declares a “climate emergency,” as the administration has said is possible . Energy analysts predict that if natural gas prices start to soar again, Biden could use his presidential powers to push for more government control over domestic oil and gas producers. Oil executives have brushed off criticism of the Biden administration, saying the only way to correct the supply-demand imbalance in global oil markets is to pump more oil. “I want to be clear that Chevron shares your concerns about the higher prices Americans are facing,” Chevron CEO Mike Wirth told Biden in an open letter. “And I assure you that Chevron is doing what it can to help address these challenges. increasing capital spending to $18 billion in 2022, more than 50% higher than last year.” Analysts also note that the oil market is highly cyclical. The industry suffered during the 2008-2009 financial crisis, again between 2014 and 2016, and most recently during the first two years of the coronavirus pandemic, says Pavel Molchanov of investment bank Raymond James. “The industry is currently enjoying record levels of profitability, but two years ago the commodity crash related to COVID was an epic disaster,” Molchanov said in an email. Pump Shock: Why Gas Prices Are So High BP’s second-quarter results, up from $6.2 billion in the first quarter, were driven by strong refining margins, “continued excellent oil trading performance” and higher fuel prices, the company said in a statement. Booming global demand and the war in Ukraine were key to the price hike, directly boosting the company’s profits. “Today’s results show that bp continues to deliver while transforming,” CEO Bernard Looney said in a statement. “We do this by providing the oil and gas the world needs today — while at the same time investing to accelerate the energy transition.” As a result of the high earnings, the company said it would boost dividend payments by 10% to 6.006 cents per common share, more than it had previously expected. “This increase reflects the underlying performance and cash generation of the business,” the company said. BP said it expected oil and gas prices to remain high in the third quarter “due to continued Russian supply disruption” and “reduced levels of spare capacity”. The geopolitical outlook has also led to a shortage of European natural gas supplies that are “heavily dependent on Russian pipeline flows”, which are expected to keep prices “elevated”. Germany is firing up old coal plants, fueling fears that climate targets will burn out Shell announced even bigger share buybacks totaling $6 billion, while Exxon said it distributed $7.6 billion to shareholders when dividends are included. Patrick De Haan, head of oil analysis at GasBuddy, said oil majors appeared to be investing in increasing supply. But in the short term, their focus appears to be on shareholder value, he said. Exxon, Chevron after blockbuster profits from booming oil prices President Biden accused US oil giants of taking advantage of difficult conditions. Speaking at the Port of Los Angeles in June, he said: “Exxon made more money than God this year.” The company pushed back, warning his government of its efforts to “criticize and sometimes discredit our industry,” as oil companies deny accusations that their policies keep prices artificially high. In May, the British government announced a windfall tax of 25% on the profits of oil and gas companies that will be used to help low-income households struggling with a sharp rise in the cost of living. US lawmakers have considered a similar tax, but it would be unlikely to pass the evenly divided Senate. British MP and opposition finance minister Rachel Reeves criticized BP’s earnings, writing on Twitter: “People are worried about energy prices rising again in the autumn, but again we see impressive profits for oil and gas producers.” Left-wing politicians and advocacy groups in both the US and the UK have called for additional taxes on oil company windfalls. Greenpeace UK tweeted “there is something particularly obscene and cruel about gas companies like Shell and BP making record profits while consumers struggle to keep warm this winter.” Rep. Rosa De Lauro (D-Conn.) tweeted “corporate monopolies are outpacing their market power, hurting families at the pump and driving up inflation,” later adding, “Americans don’t deserve to see prices rise from pump”.