ExxonMobil and Chevron booked a combined $26.5 billion in second-quarter profit after producing more oil, refining more fuel, and selling all of it into a market scrambled by war. Washington has opened a Justice Department investigation into why gasoline costs so much.
The refining margin is the story
Crude prices spiked after the Iran war cut Gulf production and collapsed tanker traffic through the Strait of Hormuz. But the bigger distortion hit downstream, where Middle Eastern refinery outages piled onto lost Russian capacity and China’s reluctance to export more fuel. Chevron’s refining profit jumped to $4.9 billion from $737 million a year earlier. Exxon’s refining business earned $5.5 billion after losing $1.3 billion in the first quarter. Exxon CFO Neil Hansen said the price problem is no longer crude. It is the shrinking availability of the products made from it.
Production records and the Hess factor
Chevron’s global production reached 4 million barrels of oil equivalent per day, helped by its Hess acquisition, while U.S. output hit a record 2 million bpd. Exxon produced 4.5 million bpd, with Permian output also reaching a record. Their refineries ran close to capacity. Chevron reported record net income of $12.2 billion, nearly five times its year-ago profit. Exxon earned $14.5 billion, double the same quarter last year and its best result since oil prices soared following Russia’s invasion of Ukraine.
The $2.25 ghost
President Donald Trump still wants gasoline at $2.25 per gallon. The national average is $4.11. There is a small hitch with that comparison: gasoline last averaged $2.25 during the pandemic, when Americans stopped driving and oil demand collapsed. Recreating that price may prove difficult without recreating the demand destruction that produced it.
Washington’s blunt instruments
Trump has ordered a Justice Department investigation into alleged price gouging, and an export ban is no longer being dismissed entirely. Chevron warned that restricting exports would discourage investment and eventually leave the market with less supply. The industry’s argument is circular: high profits fund the capacity that prevents high profits. The political response is simpler, investigate the outcome, ignore the arithmetic.