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Chevron’s Record 1st Qtr Profit | Oil Watchdog

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Chevron’s Record 1st Qtr Profit

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Fri, May 2, 2008 at 12:22 pm

    Chevron’s Record 1st Qtr Profit


    NEWS RELEASE:

    Chevron Rides Soaring Crude Oil Prices To Record Profit As Consumers Feel Squeeze At Pump

    Santa Monica, CA — Chevron today posted record first-quarter profits
    of $5.17 billion while Californians struggled with soaring gas prices
    climbing over $4 a gallon. Consumer Watchdog condemned the company’s
    profiteering and pointed to Big Oil historical data at the group’s "Oil Profits Monster"database.

    Chevron joined the other Big Five oil companies in posting record
    first-quarter earnings riding on the cushion of soaring crude oil
    prices, Consumer Watchdog said, as it called on President Bush and
    Congress to act to cut the price of crude oil, which is largely driven
    by speculation in the commodity markets.

    The quarter was Chevron’s second best quarter ever. Chevron’s profits
    from so-called upstream oil production soared 76 percent to $5.13
    billion because of the soaring price of crude oil.  Chevron’s profit
    soared 10 percent to $5.17 billion from $4.72 in the first quarter of
    2007.  (“Oil Profits Monster” quarterly data and charts for Chevron
    will be updated by 11 am PDT.)

    The nonprofit, nonpartisan Consumer Watchdog called on Bush to
    immediately stop buying market-priced oil for the federal Strategic
    Petroleum Reserve, which is at record high levels above 700 million
    barrels, and start selling a fraction of the reserve back into the
    market. The group and its Oilwatchdog.org project have also called for
    Congress to quell market speculation and end taxpayer subsidies to oil
    companies (see below).

    “We’ve seen proposals for a gas tax holiday from the presidential
    campaign trail, but in fact these are little more than political
    gimmicks,” said John  M. Simpson, consumer advocate with Consumer
    Watchdog (formerly the Foundation for Taxpayer and Consumer Rights).
    “President Bush and Congress must act immediately and take the obvious
    steps to end the crisis that threatens not only every consumer but our
    entire economy.”

    Consumer Watchdog said there is no strategic benefit more important
    than using the oil reserve to aid consumers and offset energy
    inflation. (See Consumer Watchdog’s letter to President Bush here.
    But Bush continues to turn a deaf ear to such calls. At a Rose Garden
    News Conference this week Bush refused to stop purchases for the
    reserve.  He also blamed Congress for not allowing oil drilling in the
    Arctic National Wildlife Refuge (ANWR) even though it would take a
    decade before oil could be obtained if drilling were allowed today.

    Independent oil analyst Tim Hamilton was also  skeptical of proposals
    for a gas tax holiday saying they might be well intentioned, but
    wouldn’t work. “The price at the pump is set by the oil companies to
    ration the available supplies of motor fuel,” he said. “ If the tax
    came off, consumers and truckers would simply be disappointed as the
    oil companies raised the price the same amount, effectively
    transferring all the suspended tax into the corporate coffers, which
    are already overflowing from the record profits."

    Chevron said it bought back $2 billion of its own stock.

    “This is money that could have been invested in alternative energy
    research or capital expansion. It’s wrong to use their excessive
    profits to buy shares and drive up the stock price,” said Simpson.
    “That only benefits executives whose excessive bonuses are tied to
    stock performance.”

    The company said its refining profits were little more than break-even
    because it could not pass through the soaring cost of crude oil.
    Executives from the other Big Five — ConocoPhillips, Shell, BP and
    Exxon Mobil — in announcing their results over the last week all said
    they had been unable to pass through all costs of higher crude. The
    current upward spike in pump prices is unlikely to stop even if  crude
    oil prices abate, because refiners are now working to boost profits on
    that end of the business.
     
    Consumer Watchdog has called for:
     
    – Action by President Bush to stop adding to federal Strategic
    Petroleum Reserve and sell from the reserve to stabilize and drive down
    oil futures price.  Link to CW letter to White House here.
     
    – Closure of the “Enron Loophole” in commodity trading regulation. A
    regulatory measure in the federal farm bill (S.2058 by Sens. Dianne
    Feinstein and Carl Levin) would regulate trading markets to help stop
    speculative oil pricing. (See more on Enron Loophole and farm bill amendment here.)
    Regulators should also increase the amount of margin funds that traders
    must put up in energy markets to help suppress speculation.
     
    – Senate approval of an alternative fuels bill (HR 5351) funded by
    withdrawing $1.8 billion a year in unjustified taxpayer subsidies to
    oil companies. This measure, passed by the House, has not been taken up
    in the Senate, where opponents are using a filibuster tactic to block
    passage. A similar House measure was removed from the federal energy
    bill by the Senate last year under pressure from the oil lobby.
     
    – Oversight of refinery operations, including regulation of national
    gasoline supplies. In the last decade, the average on-hand supply of
    gasoline has dropped from 30 days’ worth to about 22 days. This makes
    prices increasingly sensitive to any cuts in gasoline production.
     
    Consumer Watchdog (formerly The Foundation for Taxpayer and Consumer
    Rights) is a leading nonprofit, nonpartisan consumer advocacy
    organization.
     
    For more information, see www.ConsumerWatchdog.org or www.OilWatchdog.org

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