Phillips 66 takes crude oil and turns it into things people use every day: gasoline, diesel, jet fuel, and plastics. It runs refineries in the United States and Europe, moves oil and gas through pipelines, owns a 50% stake in a chemicals company called Chevron Phillips Chemical Company (CPChem), and sells finished fuel through gas station brands like Conoco and 76. Money comes in from four directions: the Midstream segment moves and processes natural gas liquids through pipelines; the Chemicals segment earns from CPChem's plastics and petrochemical sales; the Refining segment earns the difference between the price of crude oil and the price of finished products; and the Marketing and Specialties segment sells those finished products to drivers and businesses. The diagram below traces where the money goes.
Five years of numbers tell a story about a business that caught a big wave and is now paddling back to steadier water. Revenue jumped from $111.5 billion in 2021 to $170.0 billion in 2022, then fell three years in a row to $132.4 billion in 2025. That 2022 peak was not a sign of a permanently better business. It happened because energy prices spiked globally. When crude oil prices fell and refining margins compressed, revenue followed them down.
The cash the business generates from operations tells a similar story. In 2022, operations produced $10.8 billion in cash. By 2024, that number had fallen to $4.2 billion, less than half. The 2025 figure recovered slightly to $5.0 billion, but it is still well below the 2022 peak. Meanwhile, the company's net debt, meaning what it owes minus the cash it holds, has moved in the opposite direction, rising from $11.3 billion in 2021 to $18.6 billion in 2025. The company has been taking on more debt even as the cash coming in has shrunk.
Gross margin has been uneven. It was 8.4% in 2021, climbed to 13.1% in 2023, fell back to 9.2% in 2024, and then rose again to 12.3% in 2025. These swings are not caused by anything Phillips 66 is doing differently. They are caused by the gap between crude oil prices and finished product prices, a gap the company cannot control. When that gap is wide, margins are good. When it narrows, margins shrink.
The refining business swung from a $2.4 billion loss before taxes in 2021 to a $7.8 billion profit in 2022, then back down to $5.3 billion in 2023. The composite market crack spread that Phillips 66 tracks fell from an average of $34.26 per barrel in 2022 to $28.37 per barrel in 2023. That single number explains most of the earnings change. The company did not get better or worse at running its refineries. The market just moved.
Phillips 66 faces documented risks that go beyond normal market swings. California passed a law called SBx 1 to 2 that gives the state government power to set maximum profit margins on gasoline refining and penalize profits above that limit. The state can also restrict when refineries do maintenance. Phillips 66 has significant refining operations in California, and this law creates real legal uncertainty around those assets. Separately, California has already banned the sale of new cars with internal combustion engines starting in 2035 and mandates carbon neutrality by 2045. Similar rules in other states could reduce long-term demand for the gasoline and diesel that Phillips 66 produces.
The Midstream business, which moves natural gas liquids through pipelines, depends on oil and gas companies continuing to drill new wells. If drilling slows because prices drop or regulators tighten rules, the volumes flowing through Phillips 66's pipelines fall and cannot easily be replaced. The company also has large projects under construction, like the conversion of its San Francisco refinery to renewable diesel, that take years to complete. If regulations or market conditions shift during construction, the company may not earn back what it spent.
Phillips 66 has been spending heavily to return cash to shareholders. In 2023 alone, it paid $4.0 billion to repurchase its own shares and $1.9 billion in dividends. The company targeted returning at least 50% of operating cash flow to shareholders. That is a meaningful commitment when operating cash flow is falling and debt is rising. The 2025 pipeline acquisition for $2.2 billion added more weight to an already growing debt load.