Press Release

Shell & BP Record 1st Qtr Profits

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Tue, Apr 29, 2008 at 10:59 am

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Shell & BP Record 1st Qtr Profits

NEWS RELEASE: 

April 29, 2008

Speculative Oil Price Brings Roof-Busting Profits to Shell, BP at Cost of Squeezed Consumers, Suffering Economy

Government’s ‘Business as Usual’ Stance Is Inexcusable as Pump Price Soars, Says Consumer Group

CONTACT: Judy Dugan, cell: 213-280-0175; or John Simpson, 310-392-0522, ext. 317

Santa Monica, CA — The first-quarter record profits reported today by
oil giants BP and Shell came almost entirely on crude oil profits
driven by speculative trading, said Consumer Watchdog. Spiraling
gasoline and diesel prices have crimped the U.S. economy and pushed
consumers deeper into credit card debt, yet the White House and
Congress have failed to take even small steps to ease the pain.
 
“No driver who is pumping $80 worth of regular into the minivan each
week will be surprised by the continuing run of profit records.” said
Judy Dugan, research director of Consumer Watchdog (formerly the
Foundation for Taxpayer and Consumer Rights). “Consumers are driving
less, but for every trip they cancel, rising prices at the pump more
than wipe out their savings. They pay a second time as inflation at the
grocery store is driven by fuel surcharges on every truck delivery.”
 
The nonprofit, nonpartisan Consumer Watchdog has called for action to
quell market speculation and cut back taxpayer subsidies to oil
companies (see below), but the most obvious immediate action is for the
White House to 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.
 
“Purchases for the reserve, at these record oil prices, come straight
from the pockets of taxpayers, and by taking oil off the market they
fuel continued speculation,” said Dugan. “Yet President Bush has turned
a deaf ear on pleas by Congress and consumer advocates to take the
small, painless and beneficial step of curbing this excess. There is no
strategic benefit more important than using the oil reserve to aid
consumers and offset energy inflation.” (Click here to see Consumer Watchdog’s letter to President Bush.)

At his news conference today Bush refused to stop adding oil to the strategic reserve.
 
Shell’s $7.8 billion 1st quarter profit, 12 percent increase, was a
record, above what analysts had expected — and was less than $2
billion below the company’s entire yearly profit of $9.65 billion in
2002. BP’s $6.6 billion, 48 percent leap, was also a 1st quarter
record. (Click here to see more historical data at Consumer Watchdog’s “Oil Profits Monster” database.) Quarterly data and charts for Shell and BP will be updated by noon PDT.)
 
The companies’ refining profits did not match the increases from oil
sales, but that was in part because the oil giants are selling their
own petroleum at inflated prices to their own refineries, said Consumer
Watchdog. The current upward spike in pump prices is unlikely to stop
even if oil prices abate, because refiners are now working to boost
profits on their end of the business.
 
“When one uses the spreadsheet to compare the price at the pump with
the quarterly company profit reports, it is clear the companies have
inflated bottom lines by raising pump prices far in excess of any
actual increased cost incurring from the highly publicized increase in
the commodity price of crude, said Tim Hamilton, independent oil
analyst. “Since much of the current spike at the pump occurred in
March, next quarter profit reports can be expected to set yet another
new record.”
 
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. (Click here for to see CW letter to White House.)

- 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. (Click here to see more on Enron Loophole and farm bill amendment.)
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.
 

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J.Dugan J.M.Simpson

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