Oil Watchdog

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."

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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.