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BP's Refining Shores Up Profit | Oil Watchdog

Press Release

BP's Refining Shores Up Profit

CONTACT:

Tue, Jul 24, 2007 at 2:01 pm

    BP's Refining Shores Up Profit

    NEWS RELEASE
    July 24, 2007

    CONTACT: Judy Dugan, 310-392-0522, ext. 305, or cell: 213-280-0175

    BP’s 2nd Quarter Refining Windfall Shores Up Lower Profit Elsewhere;

    Rest of Big Oil Will Show Same Pattern Of More Money From Making Less Gasoline, Says Group

    Santa Monica, CA — British oil giant BP today reported a 29%
    increase in US refining profits for the 2nd quarter, even though its US
    refinery production dropped by 17%, said the Foundation for Taxpayer
    and Consumer Rights. BP’s U.S. figures show the gold mine that oil
    companies have found in gasoline and other refined products at US
    consumers’ expense, said FTCR and its OilWatchdog.org project.

    BP’s benchmark overall profit figure of $6.1 billion for the
    quarter was down down 1.5% from last year, but refinery profits made up
    for a 12% drop in oil production profits.

    The US refining figures, with a 2nd quarter profit of of $964
    million, up from $749 million a year ago, show how much the soaring
    refining profits meant to BP, said FTCR. (Click here to see BP numbers on refining and marketing.)

    "Oil companies including BP are making outrageous profits on
    gasoline even when they make less of it," said Judy Dugan, research
    director of OilWatchdog and FTCR. "In a normal business — like the
    local supermarket — customers would walk out on sellers who cut
    supplies and raised prices. The oil and refinery business is operating
    in a profit-machine universe outside the laws of competition."

    See OilWatchdog’s new report, "The Katrina Syndrome,"
    on how oil companies’ decisions to restrict gasoline inventories, even
    at periods when they have excess refining capacity, have generated
    price spikes.

    "The rest of the week’s profit reports are expected to
    underline the disconnect between last quarter’s flat oil prices and the
    record gasoline price spike that peaked in May," said Dugan. "The
    difference, in all cases, was poured directly into refinery profit
    margins."

    BP, alone among oil companies, publishes its estimate of global
    industrywide refining profits. This "Global indicator refining margin"
    shows US margins, which are mostly profit, at $24.40 per barrel, up
    from $17.90 last year. In Europe and Asia, refining margins averaged
    only $6.50 per barrel, barely above last year’s $6.30 a barrel.

    "This makes the U.S. consumer the cash cow of gasoline
    profits," said Dugan. "It’s a clear call for government to investigate
    what’s going on in refinery costs and profits."

    Risk to Refinery Safety, Maintenance

    BP’s profits could be called weak only in relation to the rest
    of Big Oil, said FTCR, but investors are expected to push the company
    for more cost reductions. That would likely include BP’s increases in
    maintenance spending after 15 deaths at a Texas refinery blast in 2005,
    and Alaskan oil spills and shutdowns last year. Both were blamed on
    maintenance and safety penny-pinching.

    Such investor pressures are a key reason that government must
    step in to better oversee and regulate refineries, and expand oversight
    of pipelines, said FTCR.

    "Refinery safety, maintenance, expansion and modernization
    funds should be the last things cut, not the first," said Dugan.
    "Regulatory oversight would put oil companies on an equal footing for
    such spending, insulating them from the demands of speculative
    investment."

    – 30 –

    The Foundation for Taxpayer and Consumer Rights (FTCR) is
    California’s leading nonpartisan consumer advocacy organization. For
    more information, visit us on the web at: www.ConsumerWatchdog.org and www.OilWatchdog.org.

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