Key facts
- Oil majors ExxonMobil and Chevron are expected to see their second-quarter earnings triple compared to the first quarter.
- High crude oil prices, driven by supply disruptions in the Strait of Hormuz, are contributing to these record profits.
- President Trump is criticizing the oil industry for high gasoline prices and has ordered an investigation into potential price gouging.
- The average U.S. gasoline price is $3.755 per gallon, down from its peak but up from last year.
- Industry representatives state that gasoline prices fall more slowly than crude oil prices due to market lags and low inventories.
Oil supermajors like ExxonMobil and Chevron are projected to report significantly higher earnings for the second quarter, with profits potentially tripling compared to the first quarter. This surge in profitability is attributed to a sharp increase in crude oil prices, which reached a four-year high following disruptions in the Strait of Hormuz. These earnings are expected to be the highest since 2022, a period also marked by high oil prices following Russia's invasion of Ukraine.
Amid these windfall profits, President Trump has intensified his criticism of the oil industry, accusing them of price gouging and demanding that U.S. gasoline prices immediately fall to between $2.25 and $2.50 per gallon. The U.S. Justice Department has been directed to investigate potential illegal price-gouging practices at the pump. The national average gasoline price currently stands at $3.755 per gallon, a decrease from its early May peak but still higher than the previous year.
Industry representatives argue that gasoline prices do not fall as quickly as crude oil prices due to a lag in the supply chain, low global inventories, and other input costs. Chevron's CFO noted that prices are expected to decrease as market conditions normalize. Executives within the industry express frustration at being perceived as the 'boogeyman,' emphasizing the cyclical nature of the business and the risks they undertake.