Oil Watchdog

Santa Monica, CA — BP’s 29% drop in net quarterly profits to $4.41
billion obscures the fact that, despite years of acknowledged
mismanagement, the company made nearly the same absolute profit as
during comparable periods of 2004 and 2005, said the Foundation for
Taxpayer and Consumer Rights.

A drop from record levels must not be an excuse for the
troubled company to cut safety and environmental protections, added the
nonprofit, nonpartisan FTCR.

On a "replacement cost" basis, which disregards inventory gains
and losses, BP’s third-quarter profit of $3.87 billion was above that
of 2005 ($3.79 billion) and close to that of 2006 ($4.41 billion).
(Figures from BP’s historical summary quarterly statements 2002-2006,
available on www.BP.com.)

"The oil industry has spent five years reaping nearly continuous
record profits, at the expense of motorists who have been gouged at the
pump," said Judy Dugan, research director of the Foundation for
Taxpayer and Consumer Rights. "Even with serious pipeline and refinery
accidents, BP was at the same profit trough through those years. What’s
happening now is only a nudge toward what ‘normal’ oil profits should
look like."

The BP report shows that declining pump prices and natural gas
prices in the United States were the primary factors in the drop for
BP, said FTCR.

"Led by the U.S. West, American consumers reacted to 2nd
quarter pump prices in excess of $3/gallon by cutting back on driving."
said independent oil analyst Tim Hamilton. "While the reduction of
consumption was less than 3%, it helped lead to major declines in pump
prices and refining profits, which are reflected in the ‘Refining
Margin Indicator’ in BP’s report."

FTCR also cited intense pressure by Congress on oil companies,
following record pump prices in the spring, for encouraging the
gasoline price reductions.

As companies have reduced the supply left over from summer,
pump prices are rising rapidly. The corresponding increase in profits
for the major oil companies can be expected to surface in the 4th
quarter, said FTCR. Other major oil companies are expected to report
far less dramatic drops from last year.

FTCR cautioned that BP’s announced shift away from its
pseudo-green "Beyond Petroleum" image and back to concentration on the
oil business must not erode the company’s safety promises. An
investigation of BP’s refinery operations after the 2005 Texas City
explosion that killed 15 people found that all of BP’s refineries
lacked a "culture of safety." BP’s Alaska pipeline leaks and a 2006
shutdown were attributed to sheer lack of maintenance, despite record
profits.

Click here to see the BP safety investigation report.

Click here to see testimony on BP Alaska cutbacks.

"BP pretended to be the greenest of oil companies even as it cut
corners on environmental safety in Alaska and worker safety across the
the board," said Dugan. "Now, in the name of increasing profit, it has
announced workforce cuts. Unprofitable safety and environmental
programs are are often juicy targets for managers with profit quotas to
meet. BP can’t be allowed to repeat that history."

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FTCR is California’s leading public interest watchdog. For more information, visit us on the web at: www.ConsumerWatchdog.org and also check our energy issues site: www.OilWatchdog.org.