Group Sees “Profit From Failure” in Oil Industry’s Refining Records Despite Lower Production
Santa Monica, CA — Chevron Corp. today capped oil companies’ quarterly reports with US refining profits up 41% over the same quarter last year because of the record gasoline prices paid by consumers in the spring, said the Foundation for Taxpayer and Consumer Rights. Overall refining profits rose 30.1% to $1.3 billion from $998 million last year.
Chevron finishes a week in which all of the major oil companies reported refining profit records, either absolute or quarterly, while refining less oil into fuel and other products, said FTCR (which also produces the web site OilWatchdog.org.) The nonprofit, nonpartisan group called for government investigation and far stricter oversight of the refining business.
“Chevron and the other major oil companies profited greatly from failure: long outages at refineries, aging equipment and lack of new capacity,” said Judy Dugan, research director of OilWatchdog.org and FTCR. “Chevron‘s refinery production in the first six months of this year was at the lowest level since Hurricane Katrina, yet it boosted profit to a new record as consumers paid outrageous prices at the pump. Economies are also being battered by oil companies’ profit-taking.”
– Chevron‘s overall $5.38 billion profit was its highest ever for a single quarter, up 23.6% from $4.35 billion in the same quarter last year. Its oil production profit was up more than other companies’ at 11%, to $3.63 billion from $3.27 billion, but it was refinery profits as well as an asset sale that drove the higher overall increase. Refining profits were up 41% in the US, to $781 million from $554 million, and up only 16.4% in Europe, to $517 million from $444 million the same quarter last year.
– Chevron‘s refinery production was up from its first quarter, to 881 million barrels a day from 729 million. But its six-month average of 805 million barrels a day remains at the lowest point since Hurricane Katrina. Its 2006 yearly average was 940 million barrels a day.
– ExxonMobil Thursday reported a $3.39 billion refining profit, its largest ever and nearly equaling in a single quarter its 2003 yearly refining profit of $3.5 billion.
“Refinery profit margins are disconnected from the price of oil, pushing gasoline prices to new records this spring without any natural disaster driving them, and with crude oil prices below the same quarter last year,” said Dugan. “Industry refining margins in the US are also several times the level in Europe and the rest of the world. This means that American drivers are disproportionately paying at the pump to boost corporate bottom lines.”
See also FTCR’s report, “The Katrina Syndrome,” on the driving effect of low gasoline supplies on pump prices.
FTCR urges Congress and state legislatures to investigate refinery operations, costs and profits, and to establish oversight of operations, including regulation of gasoline supply on hand, in order to moderate gasoline price spikes.
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