Item: Chevron will launch a massive $75 billion share buyback and raise its dividend, the Dow Jones energy giant announced late Wednesday. The news comes ahead of fourth-quarter earnings due on Friday. . . . Throughout 2022, President Joe Biden criticized Exxon Mobil, Chevron, and several other large producers for choosing to focus on returning money to shareholders instead of spending to increase production. . . . “For a company that claimed not too long ago that it was ‘working hard’ to increase oil production, handing out $75 billion to executives and wealthy shareholders sure is an odd way to show it,” White House Assistant Press Secretary Abdullah Hasan tweeted Wednesday. — Investor’s Business Daily

For a company that claimed not too long ago that it was ‘working hard’ to increase oil production, handing out $75 billion to executives and wealthy shareholders sure is an odd way to show it. https://t.co/BKOS3v33BR

— Abdullah Hasan (@AHasan46) January 26, 2023

Here’s the cagey catch-22 that Washington Democrats have created for American business. If corporations plow cash into new equipment or R&D, while also availing themselves of tax credits meant to encourage such behavior, they are frequently attacked for paying too little in taxes. “Greedy corporations!” But if they instead choose to return that cash to shareholders or buy back shares, well, you guessed it: “Greedy corporations!”

But there’s nothing inherently bad for business, much less immoral, about the practice. (Is there any evidence that corporate America is anything less than the best-run business sector of any rich economy?) If management is pessimistic about investment opportunities—something it’s better able to judge than politicians—then repurchasing shares or distributing a cash hoard in the form of dividends is the best move. And there’s little reason to think that it isn’t sometimes the best move. As JPMorgan noted in a 2019 analysis, “[If] companies truly were unwisely diverting money from profitable investments in order to do buybacks, then they would likely underperform over the long term, but this is not the case. Stocks of companies that buy back their shares tend to outperform both short and long term according to J.P. Morgan and independent research.”

Then there’s the oddity of making such an attack on an energy company. The sector is notorious for its boom-bust nature where profit can soar then dive, a situation not uncommonly driven by geopolitical events. Policymakers must allow these companies to take their profits when they can, even if that means returning cash to shareholders—who are the owners, let’s not forget. Here’s a great point from the Economist earlier this year on politics and the cyclical nature of industry profitability:

. . . 12 Democratic senators including Elizabeth Warren, a one-time presidential candidate, have proposed a tax on every barrel of oil big firms produce or import, equal to half the difference between the current oil price and the 2015-19 average. . . . The years Ms Warren has chosen as a benchmark were not good ones: in two of them, 2015 and 2016, the net operating margin of the global listed energy industry was negative. There was another year of operating losses in 2020, during which the oil price briefly fell below zero owing to the pandemic. If companies must endure the bad times but find chunks of their profits are seized when prices rise, their businesses lose viability. That may sound appealing to those climate activists who want to drive out of business firms like bp, whose boss recently said that high prices had turned the firm into a “cash machine”.

We don’t want to drive the companies out of business or deter investment that’s still needed in the current fossil fuel system, but also potentially in new—and green—energy sources such as advanced geothermal. Keep your eye on the big picture, Washington.

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