SAN RAMON, Calif. (AP) - businessminute
Astounding profits in the oil industry are becoming as routine as the
anguished looks of motorists filling up their gas tanks.
Chevron Corp. put yet another exclamation point on the oil patch's long run
of prosperity Friday with a first-quarter profit of $5.17 billion, or $2.48 per
share. That was up 10 percent from net income of $4.72 billion, or $2.18 per
share, last year.
The performance exceeded the lofty expectations of analysts, helping lift
Chevron shares 38 cents to $95.32.
It was the second-highest quarterly profit in the company's 129-year history
and marked the most money that it has ever made during the January-March period.
That puts the No. 2 U.S. oil company on track for its fifth straight year of
record earnings.
About the only downside to the quarter was that Chevron earned relatively
little from gasoline sales because it couldn't raise its prices fast enough to
recover its own rising costs for oil. Like its peers, Chevron doesn't produce
enough oil on its own to feed its refineries, forcing it to buy some on the open
market.
The company's division that refines and sells gasoline earned $252 million
during the first quarter, plunging 84 percent from $1.6 billion at the same time
last year.
But Chevron still pumped out plenty of oil to cash in on prices that
recently approached $120 per barrel before retreating slightly. In the United
States, the San Ramon-based company pocketed an average of nearly $90 per barrel
for crude oil sold in the first quarter, more than doubling the $38.03 per
barrel at the same time last year.
Soaring oil prices provided a similar first-quarter lift to four of
Chevron's biggest rivals -- Exxon Mobil Corp., ConocoPhillips, BP PLC and Royal
Dutch Shell PLC.
Collectively, Chevron and those four companies earned $36.9 billion in the
first quarter, a 25 percent increase from last year.
By comparison, five of the world's most influential technology companies --
Microsoft Corp., IBM Corp., Intel Corp., Google Inc. and Apple Inc. -- earned
$10.5 billion in the same period, up just 3 percent from last year.
While good news for the oil companies' shareholders, the industry's latest
earnings gusher may provide more fodder for U.S. lawmakers who have been
threatening to impose a windfall tax on the sector or adopt other measures aimed
at increasing energy supplies. The political backlash could become even more
acute as the price of gasoline rises above $4 per gallon in many parts of the
country.
"President Bush and Congress must act immediately and take the obvious steps
to end the crisis that threatens not only every consumer but our entire
economy," said John Simpson, an advocate for Consumer Watchdog, a frequent
industry critic.
Oil industry executives insist they have little control over prices that
have been driven up amid concerns about diminishing supplies and the weakening
dollar.
If the sentiments of speculative investors who have helped increase oil
prices suddenly swing in the other direction, Chevron and other big oil
companies will suffer -- particularly if the feeble U.S. economy weakens any
further, Oppenheimer & Co. analyst Fadel Gheit wrote in a note Friday.
Chevron's first-quarter earnings improvement was even more impressive than
the reported number indicated because last year's results were boosted $700
million by a one time-gain.
If not for last year's windfall and foreign exchange losses that shaved $45
million from this year's bottom line, Chevron's first-quarter profit would have
been up by 31 percent, Citigroup analyst Doug Leggate estimated in a Friday
research note.
As it was, the company's earnings were 7 cents above the average estimate
among analysts surveyed by Thomson Financial.
But revenue of $65.95 billion fell well below analysts' forecast of $75.64
billion. Nevertheless, it still surged 37 percent from last year's $48.23
billion.
Chevron's revenue would have been higher if its oil production hadn't
slipped by about 44,000 barrels per day from last year. The company's production
averaged 2.6 million barrels of oil per day in the first quarter.
AP Business Writer Adam Schreck in New York contributed to this report.
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