U.S. President Joe Biden has warned oil giants of higher taxes and other restrictions if they don’t bring down prices and increase production to ease the pressure of inflation on consumers. Biden called the substantial profits being reported by oil giants in the last quarter as “a windfall of war.”
Ahead of next week’s midterm elections, the statement made by President Biden at the White House mentioned the recently reported third-quarter profits by Shell (NYSE:SHEL) and Exxon Mobil (NYSE:XOM). Notably, Shell’s Q3 adjusted earnings more than doubled to $9.5 billion, while Exxon’s adjusted earnings jumped to $18.7 billion from $6.8 billion in the prior-year quarter.
Biden pointed out that six of the largest oil companies generated profits of more than $100 billion over the past six months. The surge in oil and gas prices due to supply constraints created by the Russia-Ukraine crisis has helped energy giants make huge profits.
The president stated, “You know, at a time of war, any company receiving historic windfall profits like this has a responsibility to act beyond their narrow self-interest of its executives and shareholders.”
Exxon Faces Biden’s Wrath
Exxon recently announced a dividend hike after reporting stellar Q3 earnings. Following this announcement, Biden tweeted, “Can’t believe I have to say this, but giving profits to shareholders is not the same as bringing prices down for American families.”
Back in June, Biden criticized Exxon for higher gasoline prices and remarked, “Exxon made more money than God last year.”
In its Q3 prepared remarks, Exxon’s CEO Darren Woods stated, “Closer to home, there has been discussion in the U.S. about our industry returning some of our profits directly to the American people.”
“In fact, that’s exactly what we’re doing in the form of our quarterly dividend,” added Woods. The CEO highlighted that by the end of 2022, the company would have paid about $15 billion to its shareholders, about 40% of whom are individual shareholders.
Is XOM Buy or Sell?
Wall Street is cautiously optimistic about Exxon Mobil stock, with a Moderate Buy consensus rating based on eight Buys and three holds. Following the staggering 81.1% year-to-date rally in the stock, the average Exxon stock price target of $111.45 suggests that shares are fully priced at current levels.
