Major Oil Cos. Reap Massive Profits    07/31 06:32

   American oil and gas giants raked in massive spring profits while fighting 
between Iran and the U.S. impeded petroleum shipments and consumers around the 
world paid more for fuel and confronted shortages.

   NEW YORK (AP) -- American oil and gas giants raked in massive spring profits 
while fighting between Iran and the U.S. impeded petroleum shipments and 
consumers around the world paid more for fuel and confronted shortages.

   The conflict, now in its sixth month, halted most shipping through the 
Strait of Hormuz, a narrow waterway that previously served as a delivery route 
for a fifth of the world's oil and natural gas. With global supplies 
constrained, prices for Brent crude, the international standard, soared from 
about $70 to above $100 a barrel for much of March, April and May, and at one 
point reached $126.

   The money that oil companies accrued between the beginning of April and the 
end of June could receive extra scrutiny this year. Gasoline, diesel and jet 
fuel prices climbed during that period, increasing costs for drivers and 
airline passengers. Supplies ran low in some countries, leading to sporadic 
fuel rationing in Australia and government office closures in Nepal and Sri 
Lanka.

   The attacks between the U.S. and Iran resulted in huge profits for some of 
the biggest publicly traded oil companies as they sold their goods for higher 
prices. Exxon Mobil on Friday reported doubling its second-quarter profits to 
$14.53 billion, up 105% from the same time a year ago. The oil giant, based in 
Spring, Texas, brought in $116.02 billion in revenue, up 42% from the same time 
last year.

   Chevron, based in Houston, nearly quadrupled its profits to $12.07 billion, 
up 385% from the same quarter last year, and reported $70.06 billion in 
revenue, up 56% from the same time last year.

   Six of Europe's largest oil companies posted first-quarter profits of $22 
billion altogether, a total which was 43% higher than the same time last year, 
according to Global Witness, a nonprofit organization that investigates 
environmental problems.

   "There are constituencies around the world who are having a very good 
crisis, and the oil producers are one of them," said Patrick Galey, fossil 
fuels lead at Global Witness. "When you compare that to the hundreds of 
millions of people who are struggling with rolling blackouts, with electricity 
curbs, rationing, waiting in line for food queues, or the disruption to 
fertilizers and the potential impact that that has on food prices, we don't 
think that it's a justifiable price for the rest of the world to be paying."

   Lawmakers propose taxing major oil producers for war windfalls

   Energy companies such as Exxon and Chevron do not set the price of American 
oil, which ricocheted from $68 to $115 a barrel during the quarter. It's driven 
by supply and demand, and what traders, refiners and other buyers are willing 
to pay.

   Nevertheless, Democrats in Congress introduced bills in March to tax major 
oil producers for profits they show from 2026 onward and have the tax proceeds 
redistributed to consumers.

   "It's fair to put a windfall profits tax on inordinate windfall profits 
rather than cut off children's food programs," Sen. Sheldon Whitehouse, a Rhode 
Island Democrat who introduced the Senate version of the legislation.

   Whitehouse's measure and a companion bill introduced by U.S. Rep. Ro Khanna 
of California would amend the U.S. tax code to impose a per-barrel excise tax 
on companies that produced or imported at least 300,000 barrels of oil per day 
in 2025. The tax would be 50% of the difference between the oil price at the 
time of the levy and the average price per barrel last year. Similar proposals 
failed to pass in previous years.

   "We cracked $4 again per gallon last weekend in gas stations that I drove 
by, and that's a big expense, particularly for families that get their income 
from driving around from job to job in the work van or the work truck," 
Whitehouse said. "It makes a real difference."

   The average price for a gallon of regular gasoline in the U.S., which was 
below $3 before the U.S. and Israel launched attacks on Iran, reached $4.11 
Friday. That's about $1 more than the cost of a gallon at this point last year.

   Refineries rake in cash while consumers pay more for fuel

   Outfits such as Exxon and Chevron, which not only extract oil and gas but 
also own refineries, are in the best position to profit from the current market 
conditions, said Tom Seng, assistant professor of energy finance at Texas 
Christian University.

   Refineries turn crude oil into gasoline, diesel, jet fuel and home heating 
oil. They're enjoying historically high "crack spreads," which is a term to 
describe the profits refineries expect to make based on the prices of oil and 
products such as gasoline and jet fuel, Seng said.

   In late July, refineries planning to buy a barrel of oil for about $80 were 
looking at potential profits of $50-$60, which is huge compared to the average 
range of $20-$25, he said.

   "The return on refining, on a percentage basis, has skyrocketed," Seng said. 
"Oil right now is priced what it is priced because of the Iran war. But in the 
meantime, the refineries are making money hand over fist."

   Globally, not all refineries have been able to get the supply of crude oil 
they need to meet demand since the conflict began, said Timothy Fitzgerald, a 
University of Tennessee professor of business economics who studies the 
petroleum industry.

   As a result, refineries that have ample oil to work with, including those in 
the U.S., are turning high profits, particularly when they make jet fuel and 
diesel, which is priced about 41% higher in the U.S. than before the Strait of 
Hormuz was blocked.

   "If you're a company that owns a bunch of refinery capacity, things look 
pretty good," Fitzgerald said.

   American refineries are running at near-full capacity and poised to benefit 
because some refineries in the Middle East and Russia were damaged, while 
others in Asia can't get the amount of oil they used to from the Middle East.

   "Ultimately, users of the energy services pay," Fitzgerald said. "Consumers, 
people like you and me buying retail motor gasoline or diesel fuel or airplane 
tickets. But it also means that almost everything else we buy has an embedded 
energy content to it ... and this is where you start to worry about it driving 
increases in costs."

   Not all oil and gas companies benefit in the same way

   In the present geopolitical environment, some companies are winners while 
others are losers, Fitzgerald said.

   "If you're a company like a U.S. (oil) producer, even a U.S.-based 
international company like an Exxon or Chevron who's got lots of production 
outside the Gulf, things are good. You're selling your product at a higher 
price," he said.

   But companies in the Middle East that are not able to benefit from higher 
prices because they are struggling to get their liquefied natural gas out of 
the Persian Gulf or have a lot of damaged oil fields or processing facilities 
have a very different take on recent events, Fitzgerald added.

   "Your ability to sell anything and the volume that you may be getting out is 
so curtailed that your revenues are way down and you're incurring higher 
transportation costs and security costs," he said.

   Exxon and Chevron weren't as profitable in the first quarter due to the way 
oil is traded; the first real opportunity they had to take advantage of higher 
prices oil was in April. Companies that had a lot of oil stored in floating 
tankers and available for spot-market trading, including some European ones, 
were able to benefit from March's higher oil prices, Seng said.