UPDATE: Chevron has since released their second-quarter 2008 profits. They earned $5.98 billion in the last three months, up 11 percent from the same period last year. While slightly less than predicted in our report, it doesn’t significantly change the per-driver share of the five companies’ U.S. profits over the past year, which remains approximately $236 per American driver.
Oil and gasoline prices have broken all records this year. Oil reached $147 a barrel, and gasoline hit a new high of $4.11 a gallon earlier this month. And oil prices were 90 percent higher over the past three months than they were a year ago. These sky-high prices have created record profits for the largest oil companies in the world—but these profits have come at a time of high costs for American families.
ExxonMobil announced today that it earned $11.7 billion in the past three months, the most profitable quarter ever for an American company. Other major companies announced huge second quarter profits of their own this week: Shell earned $11.6 billion, ConocoPhillips earned $5.4 billion, and BP earned $9.4 billion in the second quarter of 2008. Chevron is expected to release its second quarter profits tomorrow morning, but Wall Street is predicting a 30 percent growth in profits.
All told, the five companies are expected to announce that they earned over $40 billion in global profits in the last three months alone, 26 percent higher that the same period last year (based on information from the Wall Street Journal and ConocoPhillips). These staggering second quarter earnings mean that these companies are on pace to break last year’s record profits.
High prices may be good for oil company profits, but they’re bad news for American families. Higher gasoline prices are costing ordinary families hundreds, or even thousands, of dollars a year. The U.S. profits of the five largest oil companies from the first half of this year.
In the past 12 months, the five largest oil companies have earned $148 billion, including an estimated $47 billion in the United States. To put these numbers in perspective: If these U.S. profits were distributed evenly among American drivers, it would equal about $236 per driver.
Particularly at a time of record oil industry profits, Congress should reject Sen. John McCain’s tax plan that would shower tax breaks worth $4 billion a year on the five largest American oil companies. ExxonMobil alone would claim $1.2 billion a year in lower taxes that they clearly don’t need.
Congress should also close special tax breaks for the oil industry and end sweetheart terms for oil drilling in federal waters. These steps could eliminate $26 billion in oil subsidies over the next decade, raising resources that could be used for emergency aid to families struggling with energy costs or to weatherize homes to reduce heating and cooling bills and create jobs.
President George W. Bush should immediately release a small amount of oil from the Strategic Petroleum Reserve. Releasing oil from our stockpile is the fastest way to help families—the additional oil could arrive in markets within 13 days. We drew upon the oil reserves before Operation Desert Storm in 1991 and after Hurricane Katrina in 2005. It is a proven way to dampen speculation and bring down prices.
Record oil and gasoline prices this year have driven oil and gasoline company profits to their highest levels ever: $148 billion in the last 12 months alone. But these profits have not come without a cost. They represent approximately $236 for every driver in America. It is regular families, not oil companies, who are suffering in the modern economy. Congress should reject federal subsidies for oil companies, and President Bush should immediately release oil from our stockpile to bring prices down.
APPENDIX
For the purposes of this analysis we assumed that the ratio of U.S. to global profits for the first half of 2008 was equal to a company’s 2007 ratio of U.S. to global profits, as revealed in the company’s SEC filings. For one company, Royal Dutch Shell, this data was unavailable so the ratio of U.S. revenues to global revenues was used and applied to this year’s profit information. Profit information comes from the company’s publicly available financial information. Because Chevron’s second-quarter profits are not yet available, the analysis is based upon analyst expectations as reported by NPR.
Record oil profits can be allocated to drivers in every state. California drivers’ share of record oil profits, for example, equals $5.4 billion. Every state is displayed in the following table.
