On Oil Company Profits
The oil companies are making incredible amounts of money. In the first quarter this year, Exxon made $11 billion profit, on a 17% increase in earnings over last year. BP was up 64% and Royal Dutch Shell PLC, was up 25% in profit. ConocoPhillips’ first-quarter earnings increased 17% to $4.1 billion. Chevron posted a net income rise of 37%, and revenues of $65 billion. This was when gas prices were between $3.00 and $3.50. I wonder how much their profits will be second quarter with prices going at $4.00+? And remember, these are the same companies that are complaining because Congress wants to repeal a $2 billion tax break for expenses in exploration.
Someone said to me that 73% of the price of gas is the cost of the crude oil, a figure they heard a couple of weeks ago. That’s all fine and dandy. We can look at some other numbers: Exxon bought 3.1 million barrels of oil a day in the last quarter of 2007. The cost of oil averaged $75 over that period. Let’s assume they bought the same amount of oil last quarter. With the change of cost per barrel being $60 (an 80% increase) from November to June, that means Exxon will spend about $16 Billion dollars more on oil from third quarter 2007 to 2nd quarter 2008.
However, it will be interesting to see what kind of profits they made last quarter, considering the cost of gasoline rose “only” 30% over the same period. Looking at recent trends, and what they made last year, anything less than $12 Billion in profit for Exxon will be a disappointment to the stock market and investors.
Poor Exxon. Doesn’t it make you sad that they may not make double-digit billion dollar profits this quarter? *sniffle*
BTW, I saw $4.259 today. I expect to see by summer’s end close to $5.00 a gallon. How much of your profits will that eat into?
