Shell, the world’s second largest oil company, set a company record profit of $25.4 billion in 2006. The oversized payday comes even with a 23% decline in refining margins during the fourth quarter a.k.a the mid term election.
The earnings reports is more proof of the theory that industry leaders cut domestic refining profits in the run-up to the November election in order to lower gasoline prices, very likely hoping to influence the mid-term election.
Despite record refining profits all year long, every major company took a hit during the election season on the gasoline they processed and sold. By flooding the market with fuel, oil companies could bring down the price at the pump and quell voters’ demonstrated anger at the GOP over high gasoline prices. With 86 cents of every oil industry campaign dollar going to Republicans who don’t want to regulate the industry, the fourth quarter dump in profits reflects a hedged bet.
Half of all Americans understood intuitively that politics, not economics, was driving the pre-election gas price slump
Now fourth quarter profits confirm their suspicions. The question is, with gasoline prices rising, whether the new Congress will ever end the shell game by strictly regulating the nation’s refined gasoline supply.