British Petroleum Sees Lower Profits than Other Oil Companies

Despite lower profits, BP is seeing rise in stock price.

BP is often considered the least successful of Big Oil companies. It had
the lowest profits of the major Big Oil companies last quarter. Indeed,
with a $3 billion profit, it couldn’t come close to Exxon in terms of oil company profits. But despite this fact, BP was up Wednesday morning on the stock market while Exxon, Chevron and ConocoPhillips are all dropping.

Perhaps BP is experiencing a bit of a boost from the fact that the
company insists that it will be cutting costs. BP plans to get rid of
5,000 jobs. Unfortunately, this may not lead to more profits in the
long run. While $3 billion in profit is still a profit, BP would have
had more than $4 billion in profits last quarter if not for the fact
that it sustained losses from a payout resulting from the 2005 deaths of 15 workers at a Texas BP refinery.

Stock prices tends to reward "cost-cutting." But cost-cutting now could lead to increased costs later. Before deciding on BP, it is important
to look at its record. PRNewswire reports on BP’s cost-cutting record:

BP’s
earlier excessive penny-pinching on both safety and maintenance was
blamed for the Texas City disaster and its Alaska pipeline shutdown in
2006," said Judy Dugan, research director of the Foundation for
Taxpayer and Consumer Rights. "The company says it is only cutting
corporate jobs, but since safety oversight is not a profit center, BP
risks the same bad judgment that led to Texas City. …

BP has remained relatively stable; its rising stock prices are some of
the lowest among Big Oil companies. Even when it’s rising, BP stock
doesn’t make huge leaps and circumstances often force BP stock to drop
again later. Its valuation is not considered particularly good as a
result.