Huge oil companies not willing to increase supply to help reduce prices

In the United States, oil companies are ignoring calls to reduce prices by increasing supply while making huge profits due to rising oil prices. America’s largest oil producers are rejecting calls from the White House administration to increase production while making profits thanks to rising fuel prices combined with the Russia-Ukraine war.

Major energy companies, including ConocoPhillips, Pioneer Natural Resources and Devon Energy announced a sharp increase in second-quarter profits as high crude oil and natural gas prices have been in question.

NEGATIVE RESPONSE TO BIDEN

The administration of US President Joe Biden, on the other hand, had called for oil companies to increase supplies due to rising fuel prices. “There is still a chance that your companies will take urgent steps to increase the production and supply of oil, diesel and other refinery products,” Biden said, stressing that the record increase in the profit margins of oil refineries in the process also increases the economic pressure on the public.

Biden and other western politicians argue that oil companies should help lower prices by investing in new production, while companies want to transfer their profits to shareholders. The executives also argue that they have come under pressure from Wall Street to give back their earnings to investors through dividends and share buybacks.

MANAGERS RELUCTANT TO INCREASE SUPPLY

Commenting on the issue, CEO of a giant company said: “You come up to us and say, we don’t like these big dividends. We cannot change our strategy unless we have shareholders who say, We want you to go back to the growth model.”