Thursday, July 31, 2008

And The Money Keeps Rolling In From Every Side

It’s another new record for ExxonMobil: the world’s largest corporation has just reported second-quarter profits of $11.68 billion.

That’s profits. Not gross. Profits. That means the expenses are already subtracted out.

Did I mention this is for the second quarter only? Not the entire year?

Meanwhile, Shell Oil reports higher profits despite decreased production:
LONDON – Royal Dutch Shell, Europe's largest oil company, reported a 33 percent increase in second-quarter profit Thursday, helped by a higher oil price even as production declined.

Like smaller rival BP earlier this week, Shell profited from an oil price that almost doubled in the second quarter from the year earlier, but a 13 percent drop from a record on July 11 raised some concern among investors about whether oil companies can keep up the pace of earnings growth.

Your concern is noted.

BP said earlier a higher oil price started to affect consumer demand for its gasoline, which declined as much as 10 percent in the United States and Europe.

Shell's profit rose to $11.56 billion from $8.67 billion in the same period last year. BP reported a 28 percent increase in profit earlier this week, and Italian oil company Eni said Thursday that profit in the second quarter had risen 52 percent, citing a higher oil price.

Again, this is profit, not gross. Profit. In the billions. With a “b.” Just for the second quarter.

Looking at the gasoline front, some bloggers point out that a "surprise decline in the nation's gasoline stockpile” (reported by CNN), coupled with a U.S. gasoline demand that is “significantly lower than the same week a year ago,” means that oil companies have cut production to inflate prices.

Could it be that the oil companies have become accustomed to a certain lifestyle, so to speak? To certain record profits every quarter? As bloated as these profits may sound to us, when investors show "concern" when one record-breaking quarterly profit might not be quite as absurdly high as the last, it's reasonable to assume they will take appropriate action.

I read all of this as CNN touts their own poll claiming that most Americans favor off-shore oil drilling, though “Americans are divided over whether or not offshore drilling will have an immediate impact on high gas prices.”

Well, in that case, most Americans are grossly uneducated on this issue. If it were really as simple as supply and demand, then everyone would be in favor of the simple conservation measures that have been proven to lower gas prices immediately. After all, we're told lower demand is why gas prices dropped 20 cents a gallon two weeks ago.

Unfortunately, oil is a global commodity and the oil companies are global multinational corporations. It's not as easy as drilling off the coast of Florida or in the Alaska wilderness and all of our troubles disappear. What consumers in China and India do has as an impact on gas prices here in America too, and we have no control over that. In fact, anyone who is stupid enough to believe that increased oil drilling at home will do anything other than further inflate already obscene oil company profits is smoking something.

Oil companies don't give a crap about $4 gasoline in the U.S., except as it affects their bottom line. And when consumers start cutting back, ExxonMobil and Chevron, like their brethren at OPEC, turn off the spigot. They've gotten a taste of $149 barrel oil and they aren't backing down now.

So the American people can decide they want to trade tourism and fishing industries for the oil industry all they want. It isn't going to change the price of gasoline or heating oil or electricity rates at home.

The only thing that will accomplish that is getting off the oil tit. And if ExxonMobil and Chevron and the rest are too blinded by profits to read the writing on the wall and get on the new energy bandwagon, well, you can't say I didn't warn you.