Oil Companies’ Profits Spike With Gas Prices

Santa Monica, CA — BP‘s first quarter profits report today showing record profits from gasoline sales is consistent with a two year analysis showing the five major oil companies’ profits rise in direct correlation to hikes in the price at the pump, according to the Santa Monica-based Foundation for Taxpayer and Consumer Rights (FTCR).

“BP‘s 17% increase in first quarter profits over the record profit levels of 2003 is consistent with a two year trend showing profits skyrocketing in-sync with pump prices, in other words price gouging,” said Jamie Court, FTCR’s president and author of Corporateering (Tarcher/Putnam). “If greater OPED crude costs were truly driving up the price of gas, rather than price gouging, oil company profits would not be soaring.”

The five companies studied over a two year period were Shell, ConocoPhillips (76), ExxonMobil, ChevronTexaco and BP (ARCO).
View the increase in pump prices at: http://www.consumerwatchdog.org/utilities/rp/rp004216.pdf
View the increase in company profits at: http://www.consumerwatchdog.org/utilities/rp/rp004217.pdf
and http://www.consumerwatchdog.org/utilities/rp/rp004218.pdf

FTCR petroleum industry consultant Tim Hamilton found that, quarter by quarter, each run-up in gas prices resulted in a run-up in company profits. The data and graphs can be found at: http://www.consumerwatchdog.org/utilities/rp/ The presentations were revised to incorporate merger impacts and numerous special items that offset net company profits as reported in the companies’ own quarterly profit reports.

“If pump prices stay up, then 2004 will the most profitable year yet for the oil companies,” said Hamilton. “These levels of profits are likely to continue in the West regardless of any actions taken by OPEC between now and the elections, since these spikes in profits are being driven by refinery manipulation, not crude shortages.”

Both Court and Hamilton served as member of the California Attorney General’s Gasoline Pricing Taskforce.

FTCR recently has taken up the cause of trying to keep open Shell‘s Bakersfield refinery, one of only thirteen refineries left in California making California’s special CARB gasoline. The consumer group contends that if Bakersfield, which supplies 2% of the state’s gasoline, shuts down, gasoline prices will shoot even higher. FTCR has asked regulators to keep the facility open and is investigating possible legal action itself based on a case contending Shell is artificially shrinking supply to drive up gasoline prices and misrepresenting facts to the market. The goal is to force Shell to operate the refinery or sell it to a competitor rather than demolish it, as is now planned.

Earlier this month, FTCR released internal Shell documents showing the oil refiner is set to close and demolish its Bakersfield refinery despite the fact the site had the biggest refinery margins, or profits per gallon, of any Shell refinery in the nation. See http://www.consumerwatchdog.org/corporate/pr/pr004157.php3

In addition, state analysts have shown there is plenty crude oil available to the refinery in Kern County, despite Shell‘s claim to the contrary. See the Department of Conservation’s presentation at: http://www.consumerwatchdog.org/utilities/rp/rp004198.pdf

FTCR is a nonprofit, nonpartisan consumer group. Find out more at: http://www.consumerwatchdog.org