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Shell & BP Record 1st Qtr Profits | Oil Watchdog

Press Release

Shell & BP Record 1st Qtr Profits

CONTACT:

Tue, Apr 29, 2008 at 10:59 am

    Shell & BP Record 1st Qtr Profits

    NEWS RELEASE: 

    April 29, 2008

    Speculative Oil Price Brings Roof-Busting Profits to Shell, BP at Cost of Squeezed Consumers, Suffering Economy

    Government’s ‘Business as Usual’ Stance Is Inexcusable as Pump Price Soars, Says Consumer Group

    CONTACT: Judy Dugan, cell: 213-280-0175; or John Simpson, 310-392-0522, ext. 317

    Santa Monica, CA — The first-quarter record profits reported today by
    oil giants BP and Shell came almost entirely on crude oil profits
    driven by speculative trading, said Consumer Watchdog. Spiraling
    gasoline and diesel prices have crimped the U.S. economy and pushed
    consumers deeper into credit card debt, yet the White House and
    Congress have failed to take even small steps to ease the pain.
     
    “No driver who is pumping $80 worth of regular into the minivan each
    week will be surprised by the continuing run of profit records.” said
    Judy Dugan, research director of Consumer Watchdog (formerly the
    Foundation for Taxpayer and Consumer Rights). “Consumers are driving
    less, but for every trip they cancel, rising prices at the pump more
    than wipe out their savings. They pay a second time as inflation at the
    grocery store is driven by fuel surcharges on every truck delivery.”
     
    The nonprofit, nonpartisan Consumer Watchdog has called for action to
    quell market speculation and cut back taxpayer subsidies to oil
    companies (see below), but the most obvious immediate action is for the
    White House to 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.
     
    “Purchases for the reserve, at these record oil prices, come straight
    from the pockets of taxpayers, and by taking oil off the market they
    fuel continued speculation,” said Dugan. “Yet President Bush has turned
    a deaf ear on pleas by Congress and consumer advocates to take the
    small, painless and beneficial step of curbing this excess. There is no
    strategic benefit more important than using the oil reserve to aid
    consumers and offset energy inflation.” (Click here to see Consumer Watchdog’s letter to President Bush.)

    At his news conference today Bush refused to stop adding oil to the strategic reserve.
     
    Shell’s $7.8 billion 1st quarter profit, 12 percent increase, was a
    record, above what analysts had expected — and was less than $2
    billion below the company’s entire yearly profit of $9.65 billion in
    2002. BP’s $6.6 billion, 48 percent leap, was also a 1st quarter
    record. (Click here to see more historical data at Consumer Watchdog’s “Oil Profits Monster” database.) Quarterly data and charts for Shell and BP will be updated by noon PDT.)
     
    The companies’ refining profits did not match the increases from oil
    sales, but that was in part because the oil giants are selling their
    own petroleum at inflated prices to their own refineries, said Consumer
    Watchdog. The current upward spike in pump prices is unlikely to stop
    even if oil prices abate, because refiners are now working to boost
    profits on their end of the business.
     
    “When one uses the spreadsheet to compare the price at the pump with
    the quarterly company profit reports, it is clear the companies have
    inflated bottom lines by raising pump prices far in excess of any
    actual increased cost incurring from the highly publicized increase in
    the commodity price of crude, said Tim Hamilton, independent oil
    analyst. “Since much of the current spike at the pump occurred in
    March, next quarter profit reports can be expected to set yet another
    new record.”
     
    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. (Click here for to see CW letter to White House.)

    – 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. (Click here to see more on Enron Loophole and farm bill amendment.)
    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.
     

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