Big Oil Profits Still
Racing as Pump Prices Remain High
Companies Made $33 Billion in Third Quarter
By Daniel J. Weiss | Center for America Progress
full data on Big Oil 2011 profits and stock purchases)
Another quarter, another $33 billion in profits for the five
largest oil companies.
Thanks to high oil prices, BP, Chevron, ConocoPhillips,
ExxonMobil, and Royal Dutch Shell made a combined $101 billion in profits
during the first nine months of 2011. With higher oil prices looming, they
could surpass their record-setting profits of 2007 and 2008 by the end of the
year. What’s more, four of the companies are using an average of one-third of
their profits to buy back their own stock. That enriches their shareholders but
it doesn’t add to oil supplies or investments in alternative fuels or other new
Here are the third-quarter totals:
ExxonMobil enjoyed a great quarter—its profits were up 41 percent compared to last year. CNNMoney reported:
Exxon's profits are on track to do even better in the fourth
quarter, since oil prices have increased more than 13% over the last month.
Oil prices have been volatile, dropping precipitously during
the summer. But over the last year, prices have managed an increase of 13%,
largely because of increases in October and September.
As with previous 2011 quarters, Exxon spent nearly half of
its profits repurchasing its own stock.
ConocoPhillips spent slightly more than its third-quarter profits on stock repurchases (see
table), but that’s because it has earned a total of $9 billion in 2011.
Shell made $7 billion in the third quarter. This is a 40 percent increase in profits
for Shell over third quarter 2010. Unlike in previous quarters, Shell used some
of its profits to purchase some of its own stock.
BP’s profit of $4.9 billion was 75 percent higher compared to third quarter 2010
when it was faced with high expenditures due to the Deepwater Horizon disaster.
Finally, Chevron’s third-quarter profits doubled from a year
ago, “as a jump in oil prices made up for declining production,” according to
Press. In other words, more profits did not lead to more oil
production—contrary to oil industry spin. And it spent
17 percent of its profits on stock repurchases.
All told, these five companies have made a total of $101
billion in profits in 2011 with another quarter of earnings ahead.
Meanwhile, the Energy
Information Administration reports that in October — he first month of the
fourth quarter — there was a 20 percent increase in the price of oil per barrel
from $77.61 to $93.17. Gasoline
prices rose only a few cents per gallon so far but they are likely to rise
higher. Heating oil prices — critical to New England —are already 25 percent higher than last year.
With all of these prices rising, the big five oil companies
are very likely to make robust profits at the end of 2011.
Incredibly, though the big five oil companies are swimming
in billions of dollars of profits, the American Petroleum
Institute — their lobbying arm — continues to oppose elimination of tax
breaks for big oil companies worth $40 billion over the coming decade. Yet
these same five oil companies are sitting on cash resources of $59
billion and made nearly $1 trillion in profits over the past decade.
On October 14, 2011, Sen.
Robert Menendez (D-NJ) and 13 other senators urged the Joint Select
Committee on Deficit Reduction (the “super committee”) to reduce $21
billion of tax breaks for these five companies over the coming decade to
reduce the federal budget deficit.
BP, ExxonMobil, Shell, Chevron and ConocoPhillips … are
projected to make $144 billion in profits this year alone. We simply cannot
solve our budget problems by demanding sacrifices from students, seniors,
soldiers, and working class families alone. Big Oil needs to join us by paying
their fair share to help address the deficit.
Analyses by the non-partisan Congressional Research Service
and Joint Economic Committee [demonstrate] that cutting $2 billion in annual
oil subsidies and tax breaks for oil companies would not make oil and gasoline
If the five largest and wealthiest private oil companies
were willing to live with $142 billion in profits this year, rather than their
projected $144 billion, they would be paying their fair share in taxes without
raising gasoline prices one penny.
It is also important to note that these wasteful subsidies
do not create jobs. Technological improvements allow these companies to extract
more oil with fewer workers, which is why oil and gas companies cut over 4,400
jobs in 2010, despite earning enormous profits.
America’s income inequality grew dramatically over the past
30 years. Bloomberg reports on a new study by the Congressional Budget Office that determined that:
The nation’s richest citizens almost tripled their incomes
between 1979 and 2007 as the inequality of the distribution of wealth in the
United States expanded, according to a new government report.
The top 1 percent saw their inflation-adjusted, after-tax earnings
grow by 275 percent during that period, according to the nonpartisan
Congressional Budget Office.
The enormous profits of the big five oil companies are a
symptom of this 1 percent phenomenon. Eliminating their $21 billion in tax
breaks cannot undo this expanding gap between the richest of the rich and the
rest of the 99 percent. But it’s a start.
full data on Big Oil 2011 profits and stock purchases)
Daniel J. Weiss is a
Senior Fellow and the Director of Climate Strategy at American Progress.
Thanks to Noreen
Nielsen, Energy Communications Director, Center for American Progress Action
Fund, and James Barba Nazar, CAP energy intern.