Why Oil Investors Are Super Pleased With Shell
Shell is absolutely swimming in money as if it were Scrooge McDuck, and its key investors could not be happier.
This article is more than 2 years old
High gas prices have been plaguing the nation for months on end. The bloated prices have been impacting individuals and businesses alike. However, while everyone else struggles, oil companies and their investors are skipping to the bank with big fat grins and even bigger and fatter checks as profits reach record levels. Shell is among those utterly swimming in the amount of money they made, just as if it were a scene plucked straight out of DuckTales.
According to The New York Times, in a recent trade update that Shell provided to its investors, the oil company disclosed that its profit margins have tripled since January. As a result, Shell said it expects to garner between $800 million and $1.2 billion in additional revenue this coming quarter. Last quarter, Shell bought $9.1 billion in pure revenue. Adding in Shell’s estimates suggests that the company will likely accrue between $9.9 billion and $10.3 billion in profits for the coming quarter. That is an unfathomable amount of liquid capital.
What’s more, is that Shell has plans to bolster its bottom line even further by increasing the values of some of its oil fields. This is expected to drive their collective valuations up by another $4.5 billion. This is in service of investors with stakes in those specific fields.
It’s clear that Shell is taking full advantage of the current set of circumstances that served to drive oil prices up in the first place, despite the effects that its actions could continue to perpetuate. The circumstances serving to drive oil prices into the stratosphere center largely around the effects of inflation, Russia’s needless besiegement of Ukraine, as well as the fact the world still hasn’t reached the oil production levels it was at prior to the onset of the pandemic.
Shell isn’t the only big oil entity that is enjoying record profits at present. Exxon has had the dough pouring in, too. President Biden pointed to the company’s purported greed by blasting the oil giant, stating that they had made “…more money than God” in a recent speech. According to data reported by The Wall Street Journal, their profit margins have reached grossly high levels. At present, Exxon shares are trading for 11 times the amount they were the year prior.
Ultimately, whilst the enormity of both Shell’s, Exxon’s, and other oil companies’ profits are vomit-inducing for the average person just trying to make ends meet, the real question is when can one expect gas prices to go down? The answer to that is something that remains to be seen. As of now, inflation has not done too much to dissuade consumers fatigued by years of pandemic-induced restrictions from taking to the roads (and the skies). And the geopolitical conflict overseas continues to thwart the global oil supply. Simply put, the list of compounding factors keeping gas prices elevated are still very much present. Until something gives, it’s likely that there will be little movement for prices to start shifting in a downward direction.
