NEWS RELEASE:
Chevron Rides Soaring Crude Oil Prices To Record Profit As Consumers Feel Squeeze At Pump
Santa Monica, CA — Chevron today posted record first-quarter profits
of $5.17 billion while Californians struggled with soaring gas prices
climbing over $4 a gallon. Consumer Watchdog condemned the company’s
profiteering and pointed to Big Oil historical data at the group’s "Oil Profits Monster"database.
Chevron joined the other Big Five oil companies in posting record
first-quarter earnings riding on the cushion of soaring crude oil
prices, Consumer Watchdog said, as it called on President Bush and
Congress to act to cut the price of crude oil, which is largely driven
by speculation in the commodity markets.
The quarter was Chevron’s second best quarter ever. Chevron’s profits
from so-called upstream oil production soared 76 percent to $5.13
billion because of the soaring price of crude oil. Chevron’s profit
soared 10 percent to $5.17 billion from $4.72 in the first quarter of
2007. (“Oil Profits Monster” quarterly data and charts for Chevron
will be updated by 11 am PDT.)
The nonprofit, nonpartisan Consumer Watchdog called on Bush to
immediately stop buying market-priced oil for the federal Strategic
Petroleum Reserve, which is at record high levels above 700 million
barrels, and start selling a fraction of the reserve back into the
market. The group and its Oilwatchdog.org project have also called for
Congress to quell market speculation and end taxpayer subsidies to oil
companies (see below).
“We’ve seen proposals for a gas tax holiday from the presidential
campaign trail, but in fact these are little more than political
gimmicks,” said John M. Simpson, consumer advocate with Consumer
Watchdog (formerly the Foundation for Taxpayer and Consumer Rights).
“President Bush and Congress must act immediately and take the obvious
steps to end the crisis that threatens not only every consumer but our
entire economy.”
Consumer Watchdog said there is no strategic benefit more important
than using the oil reserve to aid consumers and offset energy
inflation. (See Consumer Watchdog’s letter to President Bush here.)
But Bush continues to turn a deaf ear to such calls. At a Rose Garden
News Conference this week Bush refused to stop purchases for the
reserve. He also blamed Congress for not allowing oil drilling in the
Arctic National Wildlife Refuge (ANWR) even though it would take a
decade before oil could be obtained if drilling were allowed today.
Independent oil analyst Tim Hamilton was also skeptical of proposals
for a gas tax holiday saying they might be well intentioned, but
wouldn’t work. “The price at the pump is set by the oil companies to
ration the available supplies of motor fuel,” he said. “ If the tax
came off, consumers and truckers would simply be disappointed as the
oil companies raised the price the same amount, effectively
transferring all the suspended tax into the corporate coffers, which
are already overflowing from the record profits."
Chevron said it bought back $2 billion of its own stock.
“This is money that could have been invested in alternative energy
research or capital expansion. It’s wrong to use their excessive
profits to buy shares and drive up the stock price,” said Simpson.
“That only benefits executives whose excessive bonuses are tied to
stock performance.”
The company said its refining profits were little more than break-even
because it could not pass through the soaring cost of crude oil.
Executives from the other Big Five — ConocoPhillips, Shell, BP and
Exxon Mobil — in announcing their results over the last week all said
they had been unable to pass through all costs of higher crude. The
current upward spike in pump prices is unlikely to stop even if crude
oil prices abate, because refiners are now working to boost profits on
that end of the business.
Consumer Watchdog has called for:
– Action by President Bush to stop adding to federal Strategic
Petroleum Reserve and sell from the reserve to stabilize and drive down
oil futures price. Link to CW letter to White House here.
– Closure of the “Enron Loophole” in commodity trading regulation. A
regulatory measure in the federal farm bill (S.2058 by Sens. Dianne
Feinstein and Carl Levin) would regulate trading markets to help stop
speculative oil pricing. (See more on Enron Loophole and farm bill amendment here.)
Regulators should also increase the amount of margin funds that traders
must put up in energy markets to help suppress speculation.
– Senate approval of an alternative fuels bill (HR 5351) funded by
withdrawing $1.8 billion a year in unjustified taxpayer subsidies to
oil companies. This measure, passed by the House, has not been taken up
in the Senate, where opponents are using a filibuster tactic to block
passage. A similar House measure was removed from the federal energy
bill by the Senate last year under pressure from the oil lobby.
– Oversight of refinery operations, including regulation of national
gasoline supplies. In the last decade, the average on-hand supply of
gasoline has dropped from 30 days’ worth to about 22 days. This makes
prices increasingly sensitive to any cuts in gasoline production.
Consumer Watchdog (formerly The Foundation for Taxpayer and Consumer
Rights) is a leading nonprofit, nonpartisan consumer advocacy
organization.
For more information, see www.ConsumerWatchdog.org or www.OilWatchdog.org
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