I must be in Bizarro World:
Nope, no surprise today in ConocoPhillips’ third quarter profit report… down some on lower refining profits, up some on higher oil prices. The net effect was a 5.2% drop from last year’s comparable period.
One interesting point in the report was that Conoco, unlike the rest of Big Oil, kept its refineries running at 97% of capacity in the quarter. Nationally, the figure was probably under 90%. The big question is whether Conoco and other refiners will cut back on making and storing gasoline in the next few months–which will determine pump prices next spring.
If refiners keep supplies low and try for the profit percentage they got last May (when regular gasoline prices hit a national record of nearly $3.25 a gallon with crude oil costing 20% less than it does today)… say hello to $4.50 pump prices.
That is the first time I have ever heard this “unbiased” organization say anything that was remotely complimentary about an oil company. Lo and behold, COP (unlike the rest of Big Oil) didn’t artificially hold refining capacity down. They must think keeping a refinery up and running is like keeping your corner grocery store up and running.
Refineries run 24/7, but they do come down for routine maintenance, and they come down when things break. A utilization rate of 97% is not sustainable over the course of the year. And if Oil Watchdog wanted to do a bit of investigative reporting, they could look at some related industries to see what utilization numbers look like. I can tell you that when I worked in the chemical industry, our utilization numbers hovered around 92%. We weren’t trying to keep capacity low, it’s just that things break and maintenance must be done. But Oil Watchdog thinks it’s a Big Oil conspiracy.
I have mentioned a couple of times the funny press releases they sometimes issue. The latest may be the funniest one yet. Keep in mind that this was self-issued by Oil Watchdog:
NEWS RELEASE
October 25, 2007
CONTACT: John M. Simpson,
310-392-0522, x317, or cell: 310-292-1902Consumer Advocate Confronts Chevron Chief Executive Over Soaring Gasoline Prices With “Golden Nozzle Award”
Los Angeles, CA — Consumer Advocates from Oilwatchdog.org today confronted Chevron CEO Dave O’Reilly over soaring gasoline prices and presented him with a symbolic “Golden Nozzle Award.”
The “Golden Nozzle Award” goes to Chevron for sticking it to California consumers with continued price gouging at the pumps, the Foundation for Taxpayer and Consumer Rights (FTCR) said.
FTCR stressed that soaring gas prices are largely caused by a lack of refined gasoline, not rising prices of crude oil.
“Chevron controls the amount of gasoline they make and the company artificially lowers gasoline supplies to drive up gasoline prices,” said John M. Simpson, an FTCR consumer advocate. “When refinery utilization rates are cut, prices to consumers and Chevron’s profits go up. That’s why Chevron has not built a new refinery in 30 years.”
FTCR said government regulation of refinery supplies is necessary to control soaring prices and Big Oil’s huge profits. FTCR bestowed the Golden Nozzle Award on Chevron for:
– Chevron’s outlandish profits driven by excessive gasoline prices.
– The company’s leading role in funding the opposition to the development of alternative fuels through the failed Proposition 87.
– Chevron’s refusal to clean up toxic waste contamination in the Amazon despite ample profits to cover the cost.See a photo of the Golden Nozzle here.
Read more about Chevron’s record here.
O’Reilly spoke to Town Hall Los Angeles, a nonprofit organization promoting public policy discussions, on “Securing California’s Energy Future.” Simpson attended in order to present Chevron CEO Dave O’Reilly with a golden gasoline pump nozzle.
In the second quarter Chevron’s overall $5.38 billion profit was its highest ever for a single quarter, up 23.6% from $4.35 billion in the same quarter last year. Refining profits were up 41% in the US, to $781 million from $554 million. Chevron’s third quarter profits are due to be released next week.
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The Foundation for Taxpayer and Consumer Rights is California’s leading non-profit and non-partisan consumer watchdog group. For more information visit us on the web at: http://www.consumerwatchdog.org/ and http://www.oilwatchdog.org/.
I swear I am going to start writing my own press releases. I mean, you create your own award, stalk the Chevron CEO trying to deliver it, and write a press release and then a diary about it. Is that over the top, or what? Oh, and as far as I can tell, they no longer allow comments there. The links to “Click to display or hide comments” no longer work.
“We weren’t trying to keep capacity low, it’s just that things break and maintenance must be done. But Oil Watchdog thinks it’s a Big Oil conspiracy.”
They said the same thing about power plants in California. Turns out it wasn’t always paranoia on the part of watchdogs.
Robert,
Why were oil imports down last week as the weekly EIA report showed? Is this just an anomaly, or is there more to that… is actually declining supply coming from the Mid East?
is there a statistic out there that shows me the day-to-day export rate is coming out of Mid East? thx!
R-sqared:
I am of the growing suspicion that, though I do belive Peak Oil is a realigy in the short term, it may not be a problem for some time. That is, if and once the blissful masses ever catch on.
The will either:
1. Riot and reduce the consumer base
2. Start jumping off of buildings and reduce the consumer base.
As for COP, they have always been efficient refiners but more so now that they haven’t much production nor much change of thatin sight.
C-cubed
They said the same thing about power plants in California. Turns out it wasn’t always paranoia on the part of watchdogs.
As many have pointed out in the past, there is a world of difference and several orders of magnitude of scale difference between manipulating electricity prices in California, and the world price of oil and gasoline. Especially when the IOCs actually control so little of world oil and gas production.
Why were oil imports down last week as the weekly EIA report showed? Is this just an anomaly, or is there more to that… is actually declining supply coming from the Mid East?
There are varying opinions on this. OPIS this week was strongly of the opinion that something didn’t smell right with the numbers. They suspected either an anomaly or an error, which will probably come back next week. I haven’t seen any evidence to support that, but I grant that it was highly unusual, which is why the analyst’s predictions were so far off.
But the people who are long oil have every incentive to play this up for all it is worth. Yet I reviewed U.S. and OECD inventories last night, and OPEC’s contention that they are in good shape is accurate. There have been OECD forecasts of supply shortfalls since the spring, and they never materialized. Again, they are forecasting shortfalls, and now it is conventional wisdom that the shortfalls are here.
On the other hand, OPEC is wrong to keep pointing to adequate inventories, when those inventories are being kept up by ever spiraling prices. The inventories are not the entire picture. OPEC has to start responding to price (if they can) or the world will shortly be in recession.
is there a statistic out there that shows me the day-to-day export rate is coming out of Mid East? thx!
There are a couple of tanker trackers that try to estimate these numbers, but I am not sure how often they put out a report.
The thing is, we could have lower gas prices in this country next week if people would cut their usage. But the two biggest problems I see are 1. no one really wants to give up anything. People are still buying and driving gas guzzlers, and 2. people seem to think that the amount of gas they use is insignificant. They can’t see how it all adds up to around 390 million gallons a day.
I just did a quick google search on the number of passenger vehicles in the US. According to wikipedia, there are about 243,023,485 registered passenger vehicles. Now, I’m not sure how many of these are driven every day, but lets say 90% for now. That comes out to about 1.75 gallons per vehicle, per day. That’s a much easier number to relate to. Maybe, if people could be given a target number, say 1.5 gallons a day, they would understand how important conservation and the mpg rating of cars is. I still don’t think they’d do anything about it because of reason number 1, but at least it would put consumption in perspective.
The “Golden Nozzle”?!?!?!
Now THAT is funny.
You just can’t make this stuff up, can you?