Chevron, Occidental Could Gain as Oil Prices Today Lift Gas to $4.23
Oil prices today are leaving American drivers with a national average gas price around $4.23 a gallon, more than $1 above where it stood a year ago. With the average driver using 575 gallons annually, that works out to about $600 more in fuel costs this year.
Chevron and Occidental benefit
Chevron expected $12.5 billion of free cash flow this year assuming oil averaged $70 a barrel, but the U.S. Energy Information Administration now expects about $96 a barrel. Every $1 increase in the average Brent price would add $600 million to Chevron's after-tax cash flow, supporting share repurchases at the high end of its $10 billion to $20 billion annual target range.
Occidental Petroleum built its plan around efficiency gains and debt reduction, with a goal of reducing capital spending by about $550 million versus last year and delivering more than $1.2 billion in free cash flow improvement in 2026. Each $1 increase in the average annual oil price adds about $265 million to annualized cash flow, money that can go toward capital spending, debt repayment, share repurchases, and possibly speeding up the redemption of Berkshire Hathaway's preferred equity investment.
War with Iran drives oil
The price of oil has soared this year because of the war with Iran, and that has shifted the earnings math for producers that can convert higher crude prices into cash faster than motorists can cut demand. Chevron added another layer last year with completed expansion projects and the Hess acquisition, while Occidental's debt-reduction plan is designed to lower interest expense as cash flow rises.
Warren Buffett remains tied to that Occidental story through Berkshire Hathaway's preferred equity stake, which Occidental does not currently plan to start redeeming until August 2029. If oil stays near the EIA's $96-a-barrel outlook, the gap between what drivers pay and what producers earn stays wide enough to keep both cash-flow estimates and buyback plans moving higher.
