Much of 2nd Quarter $10.4 Billion Windfall Comes Directly from Profiteering at the Pump, Group Says
Santa Monica, CA — ExxonMobil, the world’s largest oil company, Thursday posted its largest second-quarter profit ever, $10.4 billion, up 35% from last year and 86% from the $5.6 billion second quarter of 2004, a record at the time. These windfall profits come directly from the pockets of motorists nationwide who are struggling to pay more than $3 for a gallon of regular gasoline, said the nonprofit, nonpartisan Foundation for Taxpayer and Consumer Rights.
A steady succession of record profits puts the oil giant on track to beat its 2005 yearly record profit of $36 billion, an amount that would buy 600 million tanks full of gas.
“The repeated record profits of Exxon and all of the other major oil companies should refuel the outrage of motorists who are still paying $60 to fill up the minivan,” said Judy Dugan, research director of FTCR.
The portion of the oil giants’ profits attributable to its refining business was also sharply up from the same period last year, even though it refined less crude oil last quarter than in the prior year. Analysts at JP Morgan recently pegged average refining and marketing profit at $19.10 per 42-gallon barrel of crude oil, up 60% from a year ago. FTCR noted that oil companies have no desire to increase refinery output, which reduces gasoline prices, when they’re making enormous windfall profits by doing less.
“These oil giants are profiting once from the sale of crude oil at record prices and again from refining profits of 44 cents per gallon of gasoline, an amount for which there is no possible justification,” said Dugan. “Refining profits at this level are pure greed and the real explanation for outrageous prices at the pump. It’s not Mideast unrest, shortfalls in Nigerian output or any of the industry’s other so-called reasons for gasoline prices that remain 72 cents higher than they were in January.” See FTCR’s study on how little of recent price increases is due to increased costs at: http://www.consumerwatchdog.org/energy/rp/6132.pdf.
These leaping profits are even harder to bear in light of oil companies’ puny investments in alternative fuels that would help free drivers from their reliance on gasoline and ultimately reduce fuel costs, said FTCR. Exxon, for instance, spent about $10 million on alternative energy last year, less than three-hundredths of one percent of its profit. See FTCR’s news release on Exxon‘s alternative energy investment at: http://www.consumerwatchdog.org/energy/pr/?postId=6138.
Federal and state governments, cowed by the power and money of the oil lobby, have made noises of outrage but failed to take any steps to rein in these predatory profits, said FTCR, calling for the following steps:
– Passage of Proposition 87 on the November ballot in California. The Clean Energy Initiative would support vigorous research and development of clean alternative fuels and vehicles, funded by a profit-based levy on companies that extract oil in California. This “extraction tax,” which could not be passed on to motorists, would bring the state in line with other major oil-producing states.
– Passage of a tough price-gouging law as proposed earlier this year by California Atty. Gen. Bill Lockyer and Assembly Speaker Fabian Nuñez. The measure was substantially weakened by amendments and stalled in the state Senate. It should be revived in its original form in the next legislative session.
– Passage of Proposition 89, the Clean Elections Initiative, on the November ballot in California. The Legislature would not have to bend to oil industry pressure if candidates were freed by public funding from their need for the industry’s campaign contributions.
– Updating of antitrust laws, both federal and state, to deal with an oil industry so concentrated that it can collude to keep gasoline prices high without making deals in a back room.
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