Oil Cos. Post Huge Profits

[srivendel]

Oil profits off the charts
Posted Oct 28, 2005, 7:00 AM ET by John Neff
Related entries: Trends
Yesterday oil companies released their third quarter profits, and they were large. ExxonMobil earned a net income of $9.92 billion, which is the most any U.S. company has earned in a three-month period… ever. Royal Dutch Shell raked in a little over $9 billion itself, while BP earned $6.5 billion, ConocoPhillips $3.8 billion and ChevronTexaco $3.9 billion. Any hardships caused by Hurricanes Katrina and Rita were offset by the record high price of crude oil, hitting $70/barrel at one point in the third quarter. USA Today reports that while consumer backlash is expected for such high profits during a time when most motorists are being pinched at the pump, the oil companies are stressing that their industry is cyclical and it wasn’t that long ago in 2001 when the combined quarterly profits of these companies totaled less than $10 billion.

S.

[altiain]

Gotta love it.

And you wonder why they have no interest in adding any refinery capacity in the US. Currently, they run near peak capacity on average (which allows them to run near their highest efficiency point, decreasing their per unit production costs), and when some portion of refinery capacity is reduced due to maintenance or a natural disaster, supply shrinks while demand stays relatively flat, causing the equilibrium price to skyrocket. Their fixed production costs don't change when this happens, so their profit skyrockets right along with that equilibrium price.

heck, if I were Big Oil, I wouldn't be building any new refineries, either. They certainly have no economic incentive to do so.

[RX7-2nr]

ive been telling people that since gas prices started to go way up. everyone said, "oh- its because of the war." then they said that it was because of the hurricane.