Originally Published: 26 JAN 23 16:24 ET

Analysis by Allison Morrow, CNN

(CNN) -- While most blue-chip companies were reporting losses last year, Big Oil was having a moment. Crude prices surged, thanks in part to high demand and reduced supply. All of that helped make Chevron the top-performing Dow stock of last year, with shares surging more than 50%.

To be clear: It's not that Chevron, or any of its peers, did anything special to earn their windfall profits last year. There was no big innovation or breakthrough — they just got rich off the price of oil shooting up.

Now, when you're a profitable company, you have a lot of options for what to do with those profits. You can reinvest in the business, upgrading your equipment or hiring more people. You can issue a dividend to shareholders, as a treat. Or, in America, you can do a buyback, in which you use the profit to purchase your own stock on the open market.

Buybacks are increasingly common, and controversial (in fact, they were flat-out illegal until 1982).

On one hand it's an easy way for a company to reward shareholders and signal confidence in its own value (after all, what moron would buy shares in a company whose stock is about to go down?). But critics say the practice artificially inflates the stock's value by creating fake demand. Conveniently, it also gooses executive compensation, the vast majority of which comes from stock options.

See here: Chevron, which is expected to report Friday that profits for 2022 doubled to more than $37 billion, is essentially balking at calls from investors and the White House to funnel its extra cash into more drilling capacity to help reduce prices for inflation-weary customers.

Instead, Chevron is buying $75 billion worth of its own shares, and jacking up its quarterly shareholder dividend. That decision prompted rebuke from the Biden administration.

"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," said White House spokesperson Abdullah Hasan.

Chevron's buyback package is so large, according to Bloomberg, that it could fund more than four years of drilling and other projects.

Representatives for the company didn't immediately respond to requests for comment.

Of course, Chevron and other US oil producers, including Exxon Mobil, are putting some money into new energy projects this year. But, according to Reuters, those expenditures will be dwarfed by the amounts paid to shareholders.

Meanwhile, gas prices in the United States are marching higher every day, and are on track to once again breach $4 a gallon this spring.

That is what a PR consultant might call bad optics.

At least Chevron executives aren't all alone in making such bold calls.

Railroads are also saying "screw the optics" and directing profits right back to shareholders. Earlier this week, Union Pacific, one of the major freight railroads that fought off union demands for paid sick days, reported another year of record earnings.

As my colleague Chris Isidore reports, the company's employee pay and benefits rose 12% for the year, to $4.6 billion. That was far less than the $6.3 billion that Union Pacific spent repurchasing shares of stock.

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