Earned war money and hurt the president's heart? American oil companies' profits skyrocket, may ignite a direct conflict with the White House.

As the 250th anniversary of American independence approaches, American drivers have not received the expected "holiday gift" of lower gas prices, but instead witnessed an increasingly fierce public showdown between the White House and oil giants. President Trump publicly pressured gas stations and refineries to quickly lower gasoline prices, while Exxon Mobil Corporation (XOM.US) and Chevron Corporation (CVX.US) are set to announce their most outstanding quarterly earnings since 2022. It is expected that profits will more than double. The pain felt by the people due to high oil prices is turning into a tricky political issue for the Republican Party ahead of the midterm elections in November. Trump criticizes "not lowering prices fast enough" On Wednesday local time, Trump posted on his social platform Truth Social, saying, "As I promised, oil prices are rapidly falling, and gas station gasoline prices are also decreasing, but not fast enough." He said that a "very smart retailer" in the Northeast is taking action to lower gasoline prices in the Philadelphia area in time for the American 250th Independence Day celebration on July 4th. The "Freedom Fuel Network" mentioned by Trump is expected to help reduce gasoline prices at 25 gas stations in the Philadelphia area, allowing more families to travel by car during the holiday season. He also posted a picture of a gas station clearly generated by artificial intelligence, with the words "Freedom Fuel Network" on the roof and gas pumps. The White House has not provided further explanation of the network. Trump also called on the entire industry, saying, "This retailer is taking the lead, and other businesses should follow suit... they are doing this because they love the United States of America." He also warned that if there is any price gouging behavior, "big problems are ahead." Just a few days ago, Trump expressed dissatisfaction with the persistently high gasoline prices. Despite the memorandum reached between the US and Iran, pausing hostilities for 60 days and largely restoring navigation in the Strait of Hormuz, international oil prices have fallen significantly, but gas station prices remain strong. On Monday, Trump complained that, considering crude oil has dropped to $68 per barrel and continues to decline, retailers must "act quickly" and "lower prices for the great American people!" According to data from the American Automobile Association, the average gas price in the US on July 3rd was $3.84 per gallon. Currently, WTI crude oil futures trade at about $68 per barrel, and Brent crude oil is around $71. Trump had previously stated publicly that he hoped the national average gasoline price would drop to about $2.50 per gallon, around 35% lower than the current level, and even about 11% lower than the low of about $2.81 per gallon during his current term. Oil company profits surge amidst political pressure Trump's urgent call coincides with the upcoming lucrative financial performance of oil giants. According to LSEG statistics, analysts expect Exxon Mobil Corporation to achieve an adjusted net profit of around $15.9 billion in the second quarter, and Chevron Corporation to reach around $9.9 billion, both more than twice the growth in the first quarter, reaching the highest level since the Russia-Ukraine conflict disrupted the global energy market in 2022. The surge in profits is partly due to the reversal of accounting losses from derivatives hedging in the first quarter in the second quarter, but the core driver comes from the significant strengthening of market fundamentals. The energy consulting firm TPH estimates that the average gasoline crack spread in the US in the second quarter is about $25 per barrel, an increase of about $16 over the previous quarter; the diesel crack spread is about $45 per barrel, an increase of about $15, reaching a peak since the mid-2022. Due to the disruption of overseas refining capacity caused by the Iran war, strong export demand in the US further amplifies profit margins. As oil giants are about to deliver "enviable" earnings reports, tensions between the White House and the Republican Party's traditional heavyweight industry have intensified. High gasoline prices are exacerbating the Democratic Party's criticism of the "cost of living crisis" as they look to regain control of Congress, dragging down Trump's public support - with the majority of Americans believing that going to war with Iran is "not worth it." Sources revealed that the White House has urged the Department of Justice to investigate possible gasoline price manipulation, and Treasury Secretary Benson has directly warned producers and refineries that if retail oil prices do not decrease significantly, administrative means may be used. Industry defense: Lower oil doesn't mean gasoline must be lowered Faced with continuous pressure from the White House, the oil industry is increasing lobbying efforts to try to ease criticism. Several industry organizations and corporate executives repeatedly emphasized that gas prices do not simply follow the fluctuations in oil prices. Bethany Williams, a spokesperson for the American Petroleum Institute, said, "Gasoline prices do not move in sync with oil prices, especially in cases where major global shocks affect supply, refining, and inventory." Bob McNally, President of the Lapidan Energy Group, pointed out that while international benchmark oil prices have fallen to pre-war levels, US gasoline prices are still about 22% higher than before the war, highlighting structural supply and demand pressures - physical fuel market supply is tight, and gasoline inventories are limited. The American Fuel and Petrochemical Manufacturers Association also partially blamed policymakers themselves, stating that regulatory costs have also pushed up end prices. The association cited the US Renewable Fuel Standard, which requires retailers to sell a certain percentage of fuel containing ethanol or other biofuels, thereby raising consumer prices. Oil company executives privately acknowledge the awkward situation. An anonymous industry executive said, "The industry is indeed communicating with each other and considering countermeasures, but we know what will happen next and understand the political considerations behind it." Another executive bluntly said, "It's not comfortable to be seen as the 'villain,' but we must make officials understand that this is a cyclical industry. When the market is down and the industry bears all the risks, no one will pay attention to us." Chevron Corporation CFO Emil Banner also poured cold water on expectations of rapid price reductions in a recent interview, saying that it will take time for gasoline prices to return to normal. GEO Group Inc shadows and election game Making the situation more complex, the tranquility of the Strait of Hormuz remains fragile. Iran has recently reinforced its control over the strait, with a brief exchange of fire between the US and Iran last weekend followed by a ceasefire. However, the Iranian "Khatam Al-Anbia" military headquarters warned on Thursday that if oil tankers pass through the strait without following approved routes, they will face a "strong response." About 20% of the world's oil and natural gas exports pass through the strait, and any disturbance could once again disrupt the supply. The White House responded by stating that Trump's top priority is still to lower gasoline prices and emphasized that oil prices have already fallen since the Iran agreement was reached, with the government strengthening coordination with the oil industry in permitting and regulation. However, until gasoline prices actually drop significantly, the political burn felt by Trump may not dissipate. BMO Capital Markets analysts predict that oil companies will accelerate their stock buyback pace in the second half of 2026, continuing the strategy of "return over growth" since the pandemic. This prioritization of returning capital to shareholders may clash with the political calculations of the White House aiming to lower gas station numbers, continuing a head-on collision.