Oil companies roll out the barrel
Updated: 2011-05-03 07:53
By Braden Reddall (China Daily)
SAN FRANCISCO - Oil companies are continuing to post strong results, with Chevron Corp and Total SA the latest to post sharp increases in profits.
The advances came as crude prices surged and refining margins improved along with global fuel demand.
The price of oil has risen to more than $100 a barrel, putting a squeeze on drivers and raising talk of a US legislative pushback, as global energy demand and unrest in West Asia and North Africa darken the oil supply picture.
"Growing geopolitical tensions and the aftermath of the earthquake in Japan will shift the balance of the global energy markets," Total's Chairman Christophe de Margerie, said.
The surge in the price of crude, the oil refiners' main input, has led to a $1 surge in the price US drivers pay for a gallon of gasoline, angering consumers already beleaguered by years of recession, while crimping the recovery.
The oil price-boosted profits also masked production declines for both Chevron and Total, despite the many billions of dollars they spend each year to maintain steady output.
Michael Yoshikami, whose YCMNET fund manages $1.1 billion and owns Chevron shares, saw potential trouble for companies now that even US Republicans are talking of abandoning oil company tax breaks, along with the very real risk of crude prices falling sharply."At that point, it's going to be even worse for the energy companies because they're going to make money, but a lot less money. They'll still have to spend on research and development and drilling costs, and they're still going to be vilified," Yoshikami said.
The Chairman of the US House Budget Committee, Paul Ryan, said on Thursday that he supports cutting tax breaks for the oil industry as lawmakers search for ways to battle rising gasoline prices.
Chevron, the second-largest US oil company, reported a larger-than-expected 36 percent rise in earnings on Friday, but said output slipped nearly 1 percent to the oil-equivalent of 2.76 million barrels per day (bpd).
Total's oil and gas output fell 2 percent to 2.37 million bpd in the first quarter.
(China Daily 05/03/2011 page15)
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