Oil companies made billions this quarter, they told investors on calls this week. ExxonMobil earned $15.4 billion, more than doubling its earnings compared to this time last year.
Shell nearly doubled its own earnings, at $10.8 billion.
Chevron's were up 180%, at $9.9 billion.
Together, the three companies pulled in just over $36 billion this quarter.
As with the soaring profits oil companies recorded last quarter, it's largely due to the war in Iran disrupting the global oil supply. Less oil is moving through the Middle East, so the oil in other parts of the world has become much more valuable.
Brent crude is now trading around $113 a barrel. For context, before the war began, it was about $70 a barrel.
Meanwhile, demand for oil and refined products like gasoline, diesel and heating oil hasn't changed much. People still need them to heat homes, drive cars, run tractors and truck everything we buy around the country.
Dan Pickering, founder of the financial services firm Pickering Energy Partners, says that big oil companies are profiting as they meet that demand. "The majors are able to sell their barrels that they produce in the U.S. or Latin America or Europe for much higher prices," he said. "So the Middle East's loss is generally the gain of oil and gas companies in the U.S. and Europe."
On their earnings calls, oil company executives said a good chunk of their profits were going to their shareholders through dividends and stock buybacks. Shell's buyback was one of their biggest ever. Exxon announced its highest-ever quarterly dividend.
But for the most part, Pickering says, these companies are in a wait-and-see stance — they're not really spending that money on things like new drilling projects, because they know they're in an unusual moment.
"This is a period where the high prices are driven more by geopolitical events than anything else," he said. Since it's hard to predict how long those will last, he continued, "You put the money in the bank and watch to see what happens as we move into 2027."
Pickering says this makes sense because oil is a cyclical industry — prices move up and down. Companies want to hold onto their cash when times are good so they can insulate themselves when they're not so good.
A supply shock, amid two ongoing wars
The rising cost of oil has pushed up what drivers pay at the pump. Gasoline now costs about $1.20 more per gallon than it did a year ago, according to AAA. Diesel hit a record high in September, and is still close to that high.
Exxon CEO Darren Woods was one of the few to directly address the issue on an earnings call, saying, "We recognize the impact high prices have on people's lives and economic growth."
Exxon's solution, he said, is to boost production. "With products in short supply, our teams have done everything they can to keep prices down by maximizing production," he said.
Chevron CEO Mike Wirth made a similar point, telling investors, "What we can do is what we can control, and that's help consumers get as much as they possibly can out of our systems."
On these calls, executives from all the companies pointed out that they're dealing with a massive supply shock. The war in Iran, as well as Ukraine's strikes on Russian oil refineries, have taken a lot of global refining capacity offline.
The executives indicated that they don't see the situation changing anytime soon.
"If you'd asked me six months ago, would I have thought that oil prices were going to be where they are today — no," Shell CEO Wael Sawan said on his company's call. "Personally, I thought we were at a high there, and we were essentially looking at what was going to be a temporal spike."
But because the war has gone on this long, global oil reserves are at much lower levels. The U.S. Strategic Petroleum Reserve is at low levels; Europe released some of its crude oil and diesel.
"We're now seeing more and more structural stability in that higher oil price simply because we are seeing that inventory levels are being drawn down very quickly, and it's going to take quite some time to be able to refill that inventory," Sawan continued.
Calls for a windfall tax
Democrats in both chambers of Congress have called for a tax on windfall profits — excess profits that come about because of geopolitical forces outside of their control, not because of innovation. Bills introduced this spring would return some of those profits to Americans through tax rebates.
Earlier this year, Senator Sheldon Whitehouse (D-R.I.), who sponsored a windfall tax bill in the Senate, said he hopes it will also spotlight how climate-friendly renewable energy is increasingly more cost-competitive than fossil fuels. "Wind, solar, and battery power, they're not raising their prices," Whitehouse told NPR at the time.
Isabella Weber, an economist at the University of Massachusetts Amherst, has studied how windfall taxes worked in other countries. She says windfall taxes are a way to bridge the gap between what the oil companies make and what most people pay for that oil.
"The companies that are running this essential sector have been reaping record profits amidst the worst energy supply crisis that we have had in several decades," she said. "This is a contradiction that, I think, raises fundamental questions about how we organize our economy, how we organize our society, who benefits, who loses."
"When emergencies generate massive windfall profits," she continued, it creates "this crazy situation where the worst of times ends up being the best of times, which is problematic on a deeper level."
While the oil executives didn't mention windfall taxes on this week's calls, last quarter, Exxon's Woods called them a "misguided policy." He said they penalize companies that are trying to be successful in a volatile industry.
As the midterms approach, the Trump administration has taken measures to bring down the price of fuel, particularly diesel, including temporarily loosening federal rules for dyed diesel, which is used in farming, and lifting sanctions against Russia to allow more diesel to enter the world market.
But these efforts are unlikely to bring down U.S. prices — the amount of fuel Russia can release would make up only a small portion of U.S. daily demand, and dyed diesel is still not accessible to most drivers.
