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Imploring gesture and a promise:
"My government will continue to do everything in its power to lower prices for the American people," said US President Joe Biden in Los Angeles, where he commented on new inflation data
Photo Credit: IMAGO/Dominick Sokotoff/ IMAGO/ZUMA Wire
Regular gasoline at five dollars a gallon higher than ever, inflation at its highest level in 40 years, consumer sentiment at its lowest in 40 years - three dates from one and the same day, three facts that US President Joe Biden in need of explanation and apparently make them increasingly thin-skinned.
This became clear last Friday evening when Biden commented on the Department of Labor's report on consumer sentiment in Los Angeles and a reporter, towards the end of the almost 20-minute speech, questioned whether the President intended, given the all-time high in gas prices, to reduce the profits of the cut oil companies.
"Why don't you tell people what Exxon's earnings were this quarter? We're going to make sure everyone knows Exxon's earnings," Biden blurted out, before replying, "Exxon has more money this year deserves as God. And that, by the way, hasn't changed."
A remarkable comparison by the devout Catholic Biden.
His government, like Fed Chair Powell, had characterized the inflation in its first year in office as "temporary".
But the prices keep rising, threaten to jeopardize the economy and politically harass Biden:
With only 42 percent approval, the US President recorded poll numbers close to the record low of his predecessor Donald Trump in May.
Eight out of ten US citizens criticize that the US government is doing too little to counter the price explosion - and the midterm elections for the US Congress in late autumn are approaching faster than inflation is likely to fall.
The primaries have long since begun.
In his appearance, Biden describes inflation as a global challenge triggered by the pandemic, to which his government has rightly responded with trillions of dollars in aid to the economy and society.
He once again rejects the criticism of the Republicans that this aid would have opened the floodgates for inflation and initially blames Russia's war of aggression for the rapidly rising energy and food prices.
But then he unexpectedly takes aim at the US oil giants:
"One thing I want to say about the oil companies, they say they have 9,000 drilling permits. But they're not drilling. Why aren't they drilling? Because they're making more money if they don't produce more oil. First, it's going up price, and second, they're buying back their own stock, which frankly should be taxed, and they're not making any new investments. I always thought the Republicans were pro-investment. Exxon, start investing and pay your taxes, thanks," closes Biden and turns away.
Exxon expects $44 billion profit
In fact, thanks to rapidly rising oil and gas prices and despite high write-downs on its Russian business, ExxonMobil doubled its net profit in the first quarter, and at the end of the year there should be a profit of $44 billion - and the second-best result in the company's history, analysts estimate.
US rivals Chevron, Shell, BP and Total are also bursting with earning power.
The money, which is comparatively easy to earn in times of crisis, flows less into new investments, such as new oil projects or the announced green conversion of the oil companies.
Exxon invested $3.9 billion in the first quarter of this year, less money than in the previous quarter.
It is even more revealing to look at a longer period of time: according to Bloomberg, "Big Oil", as the five largest western oil companies are also known, more than halved its investments between 2013 from $159 billion to $62 billion last year.
In the current year, they could rise again to 82 billion dollars.
Investments halved, billions for shareholders
But the oil companies are pumping a lot of money into share buybacks to keep shareholders, who have suffered losses in two years of the pandemic, happy.
According to Bloomberg, Exxon, Chevron, BP and Shell spent $44 billion on share buybacks and dividends last year and could spend another $30 billion this year.
The last figure seems to have been overtaken, as ExxonMobil alone announced in early May that it would triple its share buyback program and buy back up to $30 billion worth of shares by the end of next year.
In the first quarter of this year alone, the largest US oil company paid out $5.8 billion to shareholders in the form of dividends and share buybacks.
According to reports from "Forbes", CNBC or Bloomberg, ExxonMobil contradicted the president's account.
The oil giant increased production in Texas' Permian Basin by 70 percent or 190,000 barrels per day between 2019 and 2021.
In the current year, the group wants to increase production there by 25 percent.
Exxon will also invest 50 percent more in the oil-rich region this year than last year and increase its refining capacity for processing US light crude oil by about 250,000 barrels per day, the equivalent of building a medium-sized refinery.
Yellen doesn't follow Biden's blame game
In view of the long-term massive drop in investment by the oil companies, however, experts doubt that the oil price will fall sustainably from the supply side, for example to $65 a barrel in 2030, as some projections are predicting today.
It is quite possible that Biden briefly went through the emotions in the port of Los Angeles in view of weak poll numbers and escalating prices.
In any case, his Treasury Secretary
Janet Yellen
(75) does not seem to want to follow the arguments of the US President.
You think that a "strict antitrust policy is appropriate".
However, she does not see possible greed on the part of companies, but "demand and supply as the main drivers of inflation".
When asked why the power producers were reluctant to drill, Yellen replied, "I think they're starting to do it now."
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