Shell Oil: Is It Profit or Loss? Paper Losses Blur Hard-Cash Record Profits in Industry
Oil Production and Gasoline Refining Cuts Increase Odds of Future Price Spikes, Says Watchdog
Santa Monica, CA — Shell’s 4th quarter loss of $2.8 billion, based on
the lower value of its oil inventory, turns into a $4.8 billion
quarterly profit and a $31.4 billon record yearly profit if those paper
losses are excluded, said Consumer Watchdog. Shell, the 2nd-largest
integrated oil company, also ended the year with a $15.2 billion cash
hoard, up 68% from a year ago, even as it cut oil and gasoline
production.
“These real dollars, as opposed to the Shell’s paper losses, stay in
the pockets of the company and its shareholders, after being plucked
from consumers when U.S. gasoline was over $4 at the pump and crude oil
prices hit $145 a barrel, said Judy Dugan, research director of the
nonprofit, nonpartisan Consumer Watchdog.
Shell and other major oil companies have also sharply cut refinery
output and are likely to cut further in 2009, in an attempt to raise
fuel prices and refinery profits.
In California, Shell is being investigated by state Attorney General
Jerry Brown for possible antitrust violations in its withholding of oil
supplies from a refinery that was in Chapter 11 bankruptcy. If the
Bakersfield refinery shuts permanently, Shell would profit directly,
said Consumer Watchdog. The loss the medium-sized refinery owned by
Flying J would free up more of Shell’s own oil production for Shell
refineries, while also cutting gasoline supplies in California and
raising fuel prices. (Click here to read the Los Angeles Times story.)
“The global economy was pushed toward the recessionary cliff by the
energy price spike in the middle of 2008, and the roller-coaster price
cycle will repeat unless regulators act,” said Dugan. “Both speculative
markets and refinery production need more vigorous oversight to protect
both consumers and the economy.”
Consumer Watchdog backs regulatory changes including:
– Greater oversight and regulation of all energy trading markets, as
well as trading limits, complete reporting of trades and higher trading
costs for speculative traders who are not selling or buying physical
petroleum products.
– Transparent reporting of refinery operating costs separate from
profits, and requirements that the industry keep on hand an adequate
supply of gasoline to prevent sharp price spikes.
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For more information, see:
www.ConsumerWatchdog.org
www.OilWatchdog.org