Group Calls for Refinery Investigations, Oversight to Control “Hurricane Prices” After Exxon, Shell Profit Reports
Santa Monica, CA — ExxonMobil announced a new round of record refining profits today, earning $3.4 billion in global refining income in the second quarter of 2007. With profits from other aspects of Exxon‘s business down, the extraordinary refinery figures illustrate how the oil giant depended on excessive pump prices to maintain near record quarterly earnings, said the Foundation for Taxpayer and Consumer Rights and OilWatchdog.org.
The $10.3 billion overall profit for the world’s largest company (according to Forbes magazine) was a mere $400 million less than its all-time quarterly record in the last quarter of 2005. Exxon made $1.5 billion less on oil drilling than last year but made up most of the difference with a 37% gain of nearly $1 billion ($908 million) in refining profits (to $3.4 billion from $2.5 billion), even though its refineries processed less oil last year. Dutch-based Shell (see below) also reported refining gains today that outstripped its oil operations.
“The oil industry has turned inside out in the last few years,” said Judy Dugan, research director of OilWatchdog.org. “Drivers are pick-pocketed as gasoline prices rise in spring with no connection to the price or supply of crude oil. Exxon‘s refining profits show an industry lacking any competitive market. If Exxon made cars instead of what goes in the tank, it would be out of business when it cut production and sharply raised prices.”
The refining profit windfall is even more vivid in the US, said FTCR.
– Exxon‘s US refining operations generated $1.75 billion, 51.4% of its total refining profit;
– It’s US refinery production, 1.6 million barrels a day, was only 30.2% of its world output;
– Exxon‘s 2nd quarter US output was down 7.4% from last year, while U.S. profits shot up 29.9%.
FTCR’s report released this week, “The Katrina Syndrome,” shows how refiners’ deliberate failure to increase gasoline inventories set the stage for record pump prices this spring, even though oil prices were lower in the first 6 months of 2007. The profit reports from the second quarter reinforce the disconnect between oil prices and gasoline prices, said FTCR. (See the report here.)
“Exxon‘s refining profit spike is not a one-time event,” said Dugan. “These increases have happened quarter after quarter since Hurricane Katrina, giving US drivers higher-than-hurricane prices without a natural disaster. It’s up to Congress to withstand oil industry pressure and contain this profiteering.”
FTCR has called for investigations of this year’s extended refinery outages and strong US oversight of refinery maintenance, production and supplies.
Same Refinery Windfall Pattern for Shell
Shell Oil rode to it’s $8.7 billion second quarter profit on the backs of U.S. consumers by refining less gasoline and charging more money for it, The Foundation for Taxpayer and Consumer Rights (FTCR) said today.
Figures released by Europe’s largest oil company, with huge operations in the United States, showed that profits rose 18% from $7.3 billion the previous year. But the increase in Shell‘s global refinery profits was 42% to $2.9 billion, from $2.1 billion.
Following Exxon‘s pattern, Shell reaped out-sized refining profits from US motorists. Outside the United States the increase in refining profits was 37% to $1.8 billion from $1.3 billion The U.S. profit figure soared 51% to $1.1 billion, from $733 million.
“Clearly these profits came by emptying Americans’ pockets with sky-high gasoline prices at a time when the cost of crude oil was actually lower than the previous year,” said John M. Simpson, an FTCR consumer advocate. Brent crude oil futures, a benchmark for Shell, averaged $68.66 a barrel last quarter, 2.5% less than the comparable quarter a year earlier.
An FTCR analysis of Shell‘s financial report found that the oil giant actually processed less crude oil in the United States while racking up the exorbitant profits. In the second quarter of 2006, Shell refineries
processed 978,000 barrels of oil a day in the United States. The amount slumped to 905,000 barrels daily in the most recent quarter.
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