Outside the Beltway

ConocoPhillips Profits Up 89%

Steve Verdon
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It has been a very good time for ConocoPhillips. The higher oil prices and the issue with oil refining here in the U.S. has resulted in an 89% increase in profits.

The Houston company’s net profit in the third quarter rose to $3.8 billion, or $2.68 a share, compared with $2.01 billion, or $1.43 a share, a year earlier.

I’m not sure how much of those billions are in rents that are due to the environmental regulations regarding refineries and boutique blends of gasoline, but I bet it is pretty significant.

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17 responses to “ConocoPhillips Profits Up 89%”

  1. anjin-san Avatar
    anjin-san

    Clearly the oil companies need a multi-billion dollar tax break. Don’t let that little federal deficit scare you!

  2. Eneils Bailey Avatar
    Eneils Bailey

    James, I agree with you. The WNBA is still around? And only half the players are gay? Would not watch it if they played the WNBA Championship game in my garage.

  3. Steven Plunk Avatar
    Steven Plunk

    Clearly the free market has failed when it comes to oil and it’s distillates. I don’t claim to know why but I would assume concentration of resources in a few companies hands coupled with implied price collusion. I would sure like to have a business where profits climb as raw material costs climb.

    The government should look to where the market has failed rather than just punishing the oil companies in one way or another. Fixing that market failure would ease prices and help ensure price stability in the future.

  4. Herb Avatar
    Herb

    While the price of oil has dropped to around the 60 dollar mark and we don’t see a significant drop in the price of gasoline, It sure does look likt there is a lot of collusion going on.

    What I want to know is : What is the actual price the oil companies pay for a barrel of oil?
    89% profits don’t come by accident.

    The last time oil was at $60.00 per barrel was around July and the gasoline price was at $ 2.20 per gallon. The price now remains high at around $ 2.64 per gallon.

    It in interesting to note that most every American consumer thinks the oil companies are ripping them off. I think the time is right fora “windfall profits tax” with the consumer reaping the benefits.

    Last I checked,(about a week ago) there was plenty of oil available and there is no justification for the price to remail around the $ 60 dollar mark. There is some hanky panky going on with the oil companies and their excess profits.

  5. Herb Avatar
    Herb

    Almost forgot Steve:

    While the price of gasoline is apparantly Evolutionary, The oil companies must be of the Religous mind. Every quarter now they say “Thank God”

  6. TJIT Avatar
    TJIT

    Finding an oil deposit is just the beginning of the process. Plans and budgets for extracting the oil are then put together. An important part of this process is estimating what price the petroleum will be sold for. If you estimate the selling price of oil higher then you actually sell it for you risk losing money on the project.

    Preparing to develop a field can involve spending billions of dollars before one drop of oil is produced. If the actual selling price is lower then what was estimated there will be a substantial negative impact on the project economics, the oil companies bottom line or even continued survival.

    Because of this companies are conservative when estimating the selling price for petroleum and most projects assume a selling price for oil of $12 to $23 per barrell. So if a project makes money at 12 dollars a barrell it is going to make a ton of money when oil is $60 per barrell. This is why oil companies are seeing high profit levels.

    A lot of people assume because the price of gas is high most of the oil companies profits are coming from the sale of gasoline. Refining tends to be a high volume low margin type of business so I would suspect most of the increase in profits at the oil companies is driven by an increase of revenue from crude sales not higher gasoline prices.

  7. TJIT Avatar
    TJIT

    Steven,

    You said

    “Clearly the free market has failed when it comes to oil and it’s distillates. I don’t claim to know why but I would assume concentration of resources in a few companies hands coupled with implied price collusion. ”

    What makes you say this? Every time gasoline prices go up under both democrat and republican adminsitrations there is an investigation by the FTC and there has never been any evidence that oil companies colluded to keep oil prices high.

    You also said

    “I would sure like to have a business where profits climb as raw material costs climb.”

    As explained in the post above oil companies produce the raw material (oil) used in refining. So when the price of the raw material increases oil company profits will also increase. The profits from refining that product will at best stay steady as they take the profit margin to convert that crude to gasloine and pass the increased raw material costs onto the consumer.

  8. TJIT Avatar
    TJIT

    Herb,

    You said

    “The last time oil was at $60.00 per barrel was around July and the gasoline price was at $ 2.20 per gallon. The price now remains high at around $ 2.64 per gallon.”

    You forgot about two little hurricanes called Rita and Katrina in August and September that damaged and shut down refineries all the way from Beaumont Texas to Pascagoula Mississippi. That loss of gasoline production is one of the big reasons gas prices are so high.

  9. TJIT Avatar
    TJIT

    Herb,

    You said

    “I think the time is right fora “windfall profits tax” with the consumer reaping the benefits.”

    If you put a windfall profits tax in place the tax collector might benefit but the consumer sure won’t. If you want to help the consumer leave that money with the oil company so they can find and produce more oil to lower the price for you.

    “Last I checked,(about a week ago) there was plenty of oil available and there is no justification for the price to remail around the $ 60 dollar mark.”

    How did you check the supply of oil? Estimating oil supply can be a very difficult question and people are always looking for ways to improve the oil supply estimates.

    I am also wondering how much oil is required to meet your “plenty of oil criteria”

    “There is some hanky panky going on with the oil companies and their excess profits.”

    As explained in my posts above there is no hanky panky it is just a result of the high price of crude and the conservative price estimates used for approving oil field development projects.

  10. TJIT Avatar
    TJIT

    Looks like I was wrong on the refining margins. Some companies earnings reports indicated a 50 to 60 percent increase in margins for west coast and gulf coast refineries.

  11. Herb Avatar
    Herb

    TJIT:

    If you bother to put your computer to use, you can find out how much oil is available, Just do some searching and you will be supprised what you find out.
    It’s guys like you that defend high oil prices and make it bad for consumers. Do you work for or have anything to do with the oil companies?

    It’s amazing to me that one can defend the oil companies while they are getting gouged at the pump and see these huge profits posted by the oil companies. If the oil companies are reaping such profits, It’s because they are charging the consumer to much for their product,

    Somehow TJIT, you just don’t get the picture, perhaps you should do a little research before you mount your defense of the oil companies.

  12. Herb Avatar
    Herb

    TJIT:

    Read this carefully:

    The last time oil was at $ 60.00 per barrel, gas was $ 2.20 per gallon.

    NOW, the price of oil is $ 60.00 per barrel and gas is at $ 2.64 per gallon.

    Ding-a-Ling, ling, ling.

  13. TJIT Avatar
    TJIT

    Herb,

    You are still ignoring hurricane damage to the refineries.

    Read this carefully:

    DOE Katrina update

    Scroll to the bottom and you will see the department of energy is reporting 991,000 barrels per day refining capacity still shutdown from hurricane damage. On top of this there is still a significant amount of pipeline capacity shutdown from hurricane related damage.

    Do you think that might explain the difference in price between July and now?

  14. TJIT Avatar
    TJIT

    Herb,

    You said

    “Do you work for or have anything to do with the oil companies?”

    I work in the drilling part of the oil industry.
    Herb, what do you do for a living?

    You also said

    “It’s guys like you that defend high oil prices and make it bad for consumers.”

    Guys like me help the consumer more than politicians complaining about the price of oil ever have. We actually find the oil, produce it and deliver it to the consumer.

    Herb, you really need to be nicer to guys like me. We keep your house comfortable, your lights on, and your car running. You don’t have to be real nice a simple thank you would make me happy:-)

    Cheers,

    TJIT

  15. Herb Avatar
    Herb

    TJIT:

    I was in hopes that you would do a little research prior to commenting back to me. The Katrina shortage was made up and then some from imported gasoline from foreign refiners. Shortages of oil were made up by the same means. The Saudi Oil Minister said about 2 weeks ago that they were producing about 1 Million barrels per day over demand with “No Takers” for the surplus. Kartina did hurt US refining, but not for long and gasoline was in short supply for only about a week.

    Guys like do not deserve a “Thank You” for “diong your job” that you are highly paid to do. It is obvious where you are coming from, that is, working in the patch.

    And FYI, I am retired and at one time lived in the patch in So. La. I do have a little experience that was gathered during my lifetime and have seen how the oil companies manipulated the “shortage” in the 70’s.

    Again TJIT, use your computer and DO the research and you will find out that what I am telling you is backed up with some fact.

    Also TJIT, Just today Exxon/Mibil posted a record profit increase of 75%, Shell 68% and yesterday BP posted a record profit of 89%. Now tell me there is no price gouging.

  16. TJIT Avatar
    TJIT

    Herb,

    What did you do for a living before you retired?

    Thanks,

    TJIT

  17. Herb Avatar
    Herb

    TJIT:

    I spent many years in the Steel Industry, then worked until retirement in the Aviation Industry.

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