Due to supply constraints and surging demand, oil and gas prices are hovering around record-high levels. According to AAA, the national average for a gallon of gas hit $4.59 in the past week. Furthermore, JP Morgan analysts have projected national average prices will surpass $6.20 per gallon by August. According to the American Petroleum Institute, roughly 59% of gasoline’s cost comes from oil refining. Therefore, the overwhelming demand for crude oil is helping oil and gas companies generate broad profit margins.
Energy giant Shell reported its highest ever quarterly profits in the first quarter of 2022, and analysts expect the momentum to be intact for a more extended period. And this is the case with many other major industry participants. Investors’ interest in the energy sector is evident in the Energy Select Sector SPDR ETF’s (XLE) 10.1% returns over the past month.
