Gas Prices Up, but so Are Profits and Exports as Refiners Hold Back Production
Monday, May 02, 2011
Rather than match demand for gasoline, oil companies are producing less for the U.S. market and exporting more to other countries, while taking increased profits. The result: higher prices at the pump.
The national average for one gallon of gas right now is $3.88, and in California, where prices are usually higher than in the rest of the country, the cost is $4.22.
Higher prices are the product of the nation’s refineries operating at about 81% of their production capacity, according to the Department of Energy. Over the last 20 years, production at this time of year has averaged 89%.
Also, refineries have been sending 15% to 20% of their production overseas for about a year, according to one industry analyst. These amounts are double of what they were four years ago.
With gas prices soaring, oil companies’ profits are also rising. ExxonMobil made nearly $11 billion in the first three months of 2011, representing a 69% increase over its performance for the same period last year. BP turned a profit of $7.1 billion and Royal Dutch Shell $6.3 billion in the first quarter.
“This is a page torn right out of the handbook of gouge-onomics,” Charles Langley, senior gasoline analyst at the Utility Consumers’ Action Network in San Diego, told the Los Angeles Times. “We call it the law of supply and demand: They supply less product and demand more money for it.”
Oil Companies Are Making More Money and Less Fuel (by Ronald White, Los Angeles Times)
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