Nothing says "we feel your pain" quite like two oil giants posting combined quarterly profits north of $26 billion and then casually mentioning that your wallet is going to keep getting demolished at the pump. ExxonMobil and Chevron both issued warnings on Friday that diesel, gasoline, and other refined fuel supplies will stay tight through the rest of the year, meaning elevated prices are basically your new normal. Congrats, everyone.
Let's talk about those earnings, shall we? ExxonMobil pulled in a cool $14.5 billion in Q2 profits, which is more than double what they made during the same stretch last year. Their revenue hit $116 billion, a 42 percent jump. Not to be outdone, Chevron reported $12.1 billion in earnings, roughly quadrupling their year ago haul, on approximately $70 billion in revenue. The international crude benchmark averaged around $96 per barrel during the quarter, and refining margins were fatter than a Thanksgiving turkey.
So why are gas prices staying stubbornly above $4 per gallon even when crude occasionally dips? ExxonMobil CEO Darren Woods explained there is a "disconnect" between crude oil markets and what you actually pay at the pump. Basically, global refining capacity has shrunk by nearly 9 percent thanks to disruptions tied to the Iran conflict limiting shipping through the Strait of Hormuz, reduced fuel exports from China, and Russian refinery outages caused by attacks. The price you pay is now being dictated by the supply and demand of actual refined products, not raw crude.
Woods was refreshingly blunt when asked if prices might come down anytime soon. "I wouldn't hold my breath here in the short term," he told CNBC. He added that prices will likely stay consistent with current levels "for quite a while yet" because the Strait of Hormuz needs to reopen, inventories need restocking, and shippers will need time to regain confidence in transit safety. So basically, pack a lunch.
Chevron CEO Mike Wirth offered a similarly cheerful forecast during his company's earnings call, predicting "upward pressure on product pricing" into the third quarter and possibly beyond. He pointed to low inventories of motor gasoline and strong demand for distillates like diesel and heating oil. On the bright side, Chevron did report record throughput at its U.S. refineries, exceeding 1 million barrels per day. Both companies say they are maintaining elevated output levels wherever possible, which is the corporate equivalent of saying "we're trying, okay?"
And just to sprinkle a little more joy on the situation, scheduled refinery maintenance in Q3 could further squeeze product availability. Chevron estimated this downtime will cost its downstream earnings between $175 million and $225 million. ExxonMobil projected somewhat less maintenance compared to the prior quarter.
The bottom line from both energy behemoths is crystal clear: even if crude prices mellow out, refined product markets are going to stay tight until inventories rebuild and shipping routes calm down. So keep those gas rewards cards handy, folks. You are going to need them.
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