Context-free journalism, Sunday edition: shed a tear for the oil companies' greed

the oil companies are enjoying the most obscenely bloated profits the world has ever seen, yet they're crying over reduced refinery capacity and environmental restrictions that, amazingly enough, are pushing up gasoline prices, meaning that they can make even more money...

Gas Prices Rise on Refineries’ Record Failures

Oil refineries across the country have been plagued by a record number of fires, power failures, leaks, spills and breakdowns this year, causing dozens of them to shut down temporarily or trim production. The disruptions are helping to drive gasoline prices to highs not seen since last summer’s records.

[...]

American refiners are running roughly 5 percent below their normal levels at this time of the year.

“You have a system that is taxed to the limit,” said Adam Robinson, an energy research analyst at Lehman Brothers. “This is what happens when spare capacity is eroded.”

After Hurricanes Katrina and Rita disrupted the nation’s energy lifeline two years ago, oil companies delayed maintenance on many of their plants to make up for lost supplies and take advantage of the high prices. But, analysts say, they are now paying a price for deferring repairs.

[...]

The refining crunch has pushed wholesale gasoline prices up 35 percent this year and has contributed to a 23 percent gain for crude oil prices. Oil futures in New York closed at $75.57 a barrel on Friday.

Some critics of the industry have theorized on Internet blogs that the squeeze on gasoline and other refined products points to a deliberate effort among oil companies to bolster profits by keeping supplies tight. But experts point out that the companies have little incentive right now to hold back on fuel supplies.

“Every refinery would like to run as much crude as possible but they simply can’t,” said David Greely, senior energy economist at Goldman Sachs, who in a recent report compared the drop in domestic refining with an “invisible hurricane.” “These are more complex systems. There are more chances for things to go wrong. And when things go wrong, they tend to back up the system.”

Meanwhile, refiners have been scrambling to meet a raft of environmental regulations, phase out toxic additives, add ethanol to the fuel mix and introduce new ultralow sulfur standards for gasoline and diesel. Industry insiders attribute much of the fragility of refining operations to the difficulty of making these cleaner fuels.

[...]

“It’s a marvel we can continue to run refineries the way we do these days given the many requirements and specification changes we have,” said Charles T. Drevna, executive vice president of the refining industry’s main trade group, the National Petrochemical and Refiners Association. “There comes a time when the piper has got to be paid.”

[...]

No refineries have been built in the United States in over three decades, because refiners say they are too costly. Instead, they have been expanding their existing refineries.

honest to great jumping jehosophat on a bagel, do they honestly expect us to swallow a claim that their failure to deal with refining capacity problems and environmental regulations is something that couldn't have been well and truly foreseen, and that some of that mind-boggling profit couldn't have been reinvested to deal with both in a timely manner...? this is an open and shut case of greed, greed and more greed, and shame on anybody for trying to make us think otherwise...

now, let's jump to the context-free portion of this post... one, nowhere in the article is it mentioned that the oil companies are vertically integrated and most of them own their own refineries... instead the article reads as though the refineries are an industry apart from their parent companies... two, nowhere in the article are the continuing sky-high profit levels of the oil companies mentioned... the closest they come is this...

All this is happening as the industry goes through another golden age. After 20 years in the doldrums, the refining business has never been so good for oil companies. Refining margins — the difference between the price of crude oil and the value of refined gasoline made from it — have shot up as much as $25 a barrel for some types of crude oil, compared with about $5 a barrel just a few years ago.

again, refining is presented in a box, with its profit margins not explicitly connected to the profitability of the parent company, and we are left with an incomplete and misleading picture...

here's what conocophillips says about how oil company profits should be used...

Basically, oil company profits are used for two purposes: to pay dividends to shareholders in the business and to pay for capital investments to find, produce, process and deliver energy products to consumers.

find, produce, PROCESS and deliver... but they aren't reinvesting in the processing side... why...? maybe this article on the 2007 first-quarter earnings report of exxon mobil holds a clue...

Exxon Mobil, the world's biggest oil company, said profit climbed 10 percent to a first-quarter record after higher gasoline and diesel prices increased refining profit.

Profit rose to $9.28 billion from $8.4 billion in the comparable period a year earlier, the Irving, Tex., company said in a statement yesterday. Revenue fell 2 percent, to $87.2 billion.

Refining profit rose 50 percent, as the company increased fuel output at its 45 plants and as growing demand and breakdowns held back competing producers.

or this from 2006...

ExxonMobil, the world's biggest oil company, announced that it earned more than $8 billion in the first three months of the year. The news follows Conoco Phillips' announcement that it earned $3.3 billion during the first quarter of 2006. Chevron is set to announce its quarterly profits Thursday.

or this from 2005...

Exxon Mobil Corp., the world's largest publicly traded oil company, said yesterday that second-quarter profit rose 32 percent, to $7.64 billion, as Asia and North America used more crude oil and gasoline.

The quarterly profit was the third-highest in the company's history. Revenue climbed 25 percent, to $88.57 billion, Exxon said.

didja catch all that...? a profit increase of 32% to $7.64B in the SECOND QUARTER of 2005, jumping to $8B in the FIRST QUARTER of 2006, and 10% to $9.28B in the FIRST QUARTER of 2007...

think about that at your next fill-up...

Submit To Propeller
Tweet