Not everybody is feeling the pinch at the pump these days.
Exxon Mobil Corp. released a report the week of Sept. 4 stating that its profits are up 69 percent from this time last year to a staggering $110 million a day. The company stands to make $10 billion by the end of the current fiscal quarter. That’s up 34 percent from the same quarter last year.
In addition, The Philadelphia Inquirer reported that the Prudential Equity Group said refining margins – the money that refineries make on each barrel of fuel they produce – doubled in the wake of Katrina, to $28.04 per barrel. By contrast, the margin in 1997 was only $4.40 per barrel.
Jacques Rousseau, an energy analyst at investment bank FBR, told The Boston Herald that there is a simple explanation behind these record profits: the extra money consumers are paying at the pump is going straight into the bottom line of the oil companies.
In other words, he said, consumer prices are going through the roof while the cost of producing fuel hasn’t really changed.
The oil companies maintain that it’s simply a case of supply and demand, and that the extra money is needed to further exploration for new oil and to build up refineries. Some critics, such as consumer watchdog group The Foundation for Taxpayer and Consumer Rights, aren’t buying it.
Jamie Court, president of the group, said in a news release that the oil companies are intentionally driving up prices.
“Large oil companies have for a decade artificially shortened the gasoline market to drive up prices,” he said. “Katrina should be a wakeup call to America that the refiners profit widely when they keep the system running on empty.”