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Oil Companies' July 4 Celebration: $140 million in excess profit; | Oil Watchdog

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Oil Companies' July 4 Celebration: $140 million in excess profit;

CONTACT:

Mon, Jul 3, 2006 at 12:16 pm

    Oil Companies' July 4 Celebration: $140 million in excess profit;

    NEWS RELEASE:
    July 3, 2006

    CONTACT: Jamie Court, 310 392-0522 ext. 327

    Group Calculates Consumers Pay 50 cents a Gallon More than Last Year

    Santa Monica, CA — Motorists nationwide are sending $140 million in extra profits over last year’s figures to oil companies, cause for corporate celebration but for consumers only pain at the pump, said the nonprofit, nonpartisan Foundation for Taxpayer and Consumer Rights (FTCR).

    Regular gasoline today costs about 72 cents a gallon more nationally than it did at this time last year, and 85 cents a gallon more in California. Of that, 41 cents goes to increased profits for oil companies nationally, for a whopping extra profit to the oil companies of $140.8 million dollars, said FTCR. California alone is paying $22.5 million a day in extra profits over the same period last year.

    "The price at the pump and the profit margins of the oil companies keep setting record highs every year," said petroleum analyst Tim Hamilton, who completed the analysis for FTCR. "It is hard to say where or when it will stop."

    The chart below, (click here to view chart) from Hamilton, shows daily average gasoline consumption in the U.S. and in California, based on 2005 figures. Then the per-gallon price increase from June 2005 to June 2006 (the latest available data), the increase in the price of crude oil over the same period, and the pump increase above the per-gallon cost of crude oil. Most of that is profit, as other costs are relatively stable.

    The result, at the right hand side of the chart, is the excess profit paid daily by motorists to oil companies.

    Here’s how the calculation works: On July 1, 2005, the spot market price of the US crude benchmark "West Texas Intermediate" (WTI) was $59.11 per 42 gallon barrel or $1.41 per gallon. On June 30, 2006, the EIA reported the spot price at $72.05 or $1.72 cents per gallon. Year to year, the spot price went up 31 cents per gallon.

    The chart above shows that the pump price in the US went up 72 cents per gallon, or 41 cents more than the increase in crude oil prices. In CA, the price rose 85 cents, or 54 cents above crude, less four cents for increased state taxes. Multiplied by the estimated volume on the fourth of July (average daily volume in June 2005), consumers will pay nearly $141 million more at the pump in the US on July 4 alone, due to inflated refinery profits. In California, consumers will pay $22.5 million more in inflated profits over record-setting 2005 profits.

    If that’s not enough to make consumers wish on Independence Day for independence from oil companies, see the graph below (click here to view graph), showing the increase in gasoline prices over the last five years.

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