As Drivers Gird for Another Round of $3-Plus Summer Pricing, San Ramon-Based Chevron Should Answer for Profiteering
Santa Monica, CA — Chevron Corp’s record 2006 profit of $17.14 billion was 22% higher than its record of 2005, overwhelming its slight drop in the 4th quarter and more than double the 9% yearly profit increase of Exxon and larger than other oil companies’ as well.
Chevron‘s yearly profit was also more than twice its then-record $7.2 billion in 2003, after its merger with Texaco had been fully accounted for.
The company’s 2006 windfall came in large part at the expense of motorists in California, where Chevron is based, said the Foundation for Taxpayer and Consumer Rights (FTCR). The company is also the state’s largest refiner.
Chevron was a major driver of the state’s record $3.38 gasoline prices last spring, and reaped the benefit of California gasoline prices that averaged as much as 70 cents per gallon higher than the national average. AAA figures show that California today averages nearly 40 cents per gallon more than the national average.
The nonprofit, nonpartisan FTCR noted that Chevron‘s 11% profit decline in the company’s US gasoline refining and marketing profits in the fall 4th quarter, widely suspected to be a deliberate profit restriction to reduce gasoline prices in advance of the November election, was offset by a 44% increase in international profits from refining. This adds to indirect evidence that the U.S. refining profit drop was voluntary in an attempt to quell popular anger at a time when high gas prices had become a key political issue and California voters were considering Proposition 87 to force oil companies to pay for alternative fuel development.
“Congress, and particularly the members from California, should be furious at this level of profiteering, even as Chevron and the rest of Big Oil resists Congress’ attempt to recover royalties that the companies have been evading for years,” said FTCR President Jamie Court.
Chevron reported that its rate of return on capital investment was a whopping 23%, many times the single-digit returns of other large global industries that are honestly competitive, said FTCR. The auto industry, for example, averages a return of about 7%.
“People can make a choice about buying a new car,” said Court. “But they have no choice about filling up the minivan to get to work or take the kids to soccer practice.”
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