Oil Giants' $130B Profit Meets Midterm Gas Price Anger

US oil companies earned more than $130 billion in the six months after the Iran war began — nearly three times the same period a year earlier. Over the same stretch, American consumers spent an extra $147 billion on gasoline and diesel, or more than $1,100 per household. The figures, compiled by Zhihu author Steven Li, point not just to volatile energy prices but to a vast redistribution of wealth — from people at the gas pump to shareholders of ExxonMobil and Chevron.

That matters because it hits two sensitive spots at once: inflation and the midterm elections. With only days left before the vote, gasoline prices are heading toward the most expensive Election Day in US history. Energy also carries heavy weight in inflation data, which directly shapes voters’ wallets and moods.

Profits and bills: a quiet wealth transfer

ExxonMobil’s third-quarter profit doubled from a year earlier to $15.4 billion; Chevron’s came close to $10 billion. Both set records for fuel-related earnings. Ordinary Americans, by contrast, have seen real hourly wages turn negative against inflation. The oil windfall is not a side effect of inflation — it is an engine of cost-push inflation. Average gasoline prices have reached $4.23 a gallon and diesel $6.33, with energy prices up more than 35% year on year. That has pushed overall PCE to 3.6% and core PCE to 3.1%, ever further from the Federal Reserve’s 2% target.

The transmission to monetary policy is asymmetric. Rate hikes can suppress demand but cannot break a blockade of the Strait of Hormuz or ease a shortage of refining capacity. The Fed can hold rates at 3.75%–4.00%, but ordinary households are expected to pay 21% more for heating oil this winter. Inflation has not been tackled at the root; it has merely been set aside.

A political powder keg: gas price anxiety before the midterms

The cost of setting it aside falls on the midterms. With only days to go, gasoline prices are heading toward the most expensive Election Day in US history. Former President Trump said at a rally: “I don’t give a damn, we’re making a lot of money.” The political damage is that it puts the distributional question — who benefits, who pays — squarely on the table.

Democrats have said that if they retake the House, oil industry windfalls will face congressional hearings. More tellingly, Trump himself has publicly complained that oil companies are “making too much” and, under party pressure, directed the Justice Department to investigate “price gouging.” A president who bills himself as pro-fossil-fuel opening fire on his traditional donors before an election shows that the political pain of high gas prices now outweighs ideological comfort.

Inflation and accountability

For inflation, oil windfalls mean energy costs stay high, the Fed’s room to maneuver shrinks and a soft landing gets harder. For the election, high gas prices translate directly into voter discontent that could sway swing districts. Views differ: some argue oil companies simply seized a market opportunity and that a windfall tax would deter investment; others say such profits lack legitimacy in wartime and Congress should investigate.

Either way, one fact is hard to avoid: as ordinary families pay 21% more for heating oil, oil majors’ shareholders are enjoying record dividends. That contrast is itself fuel for political mobilization. The midterm results may offer a first answer to the question of who pays.

Source: Zhihu https://www.zhihu.com/question/2100008044641907246/answer/2100034044515857912?utm_medium=openapi_platform&utm_source=b38f6831b176