Biden chides oil firms for fattening profits

US President Joe Biden on Friday accused the US oil industry, and Exxon Mobil Corp in particular, of capitalizing on a supply shortage to fatten profits after a report showed inflation surging to a new 40-year record.

US consumer inflation accelerated in May as gasoline prices hit a record high and the cost of food soared, leading to the largest annual increase in four decades. A gallon of regular gasoline cost an average $4.99 nationwide on Friday, according to motorist group AAA.

Biden, who came into office vowing to reduce US dependence on fossil fuels, said on Friday he was hoping to speed up oil production, which is expected to hit record highs in the United States next year.

But he also issued a warning to the industry, whose profits have jumped with oil and gas prices, pointing to the gains as evidence consumers are paying for more than higher labor and shipping costs.

"Exxon made more money than God this year," Biden told reporters following a speech to dockworker union representatives at the Port of Los Angeles. US oil companies are not using higher profits to drill more but to buy back stock, he added.

Share buybacks improve earnings per share by reducing the number of shares outstanding, indirectly helping to boost share prices. Companies see buybacks as a way to reward investors.

"Why aren't they drilling? Because they make more money not producing more oil," Biden said. "Exxon, start investing and start paying your taxes."

Exxon pushed back at the comments, noting it has continued to increase its US oil, gasoline and diesel production, and had borrowed heavily to increase output while suffering losses in 2020.