A customer pumps gas in California. While many middle-class programs are facing cuts, the big five oil companies continue to enjoy huge profits and tax breaks. (Credit: AP)

Despite the severe budget cuts facing many middle-class programs, the five biggest oil companies continue to rake in tens of billions of dollars in profits, while still receiving unnecessary and wasteful tax breaks.

Middle-class families have gotten some relief at the pump this spring due to declining gasoline prices. AAA reported that U.S. drivers paid an average of $3.55 per gallon of gasoline in April, the least expensive average for this month since 2010. Gasoline prices are now almost 35 cents lower than they were one year ago, when gasoline cost an average of $3.89 per gallon.

Despite lower prices at the pump, the biggest publicly traded oil companies in the world have raked in billions of dollars in profit over the past three months. According to their earnings reports released today, the big five oil companies—BP, Chevron, ConocoPhillips, ExxonMobil, and Shell — earned a combined $30.2 billion during the first quarter of 2013, or $331 million per day. Cumulatively, Big Oil profits were 6 percent lower than the first quarter of 2012 due to lower gasoline and oil prices, but these companies still earned a combined $229,832 every minute from January through March. This is more than what 95 percent of American households earn in an entire year.

Nearly one-third of these profits were used to repurchase companies’ stock, which only serves to pad the pockets of senior executives and the largest shareholders. The big five oil companies are also sitting on $82 billion in cash reserves, according to reports from the Securities and Exchange Commission for each company. While making these huge profits, BP and Exxon are the culprits in ongoing major oil disasters that are affecting the Gulf Coast and Arkansas.

Big Oil behaving badly again

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Daniel J. Weiss is a Senior Fellow and the Director of Climate Strategy at the Center for American Progress. Jackie Weidman is a Special Assistant to the Energy team at the Center. Thanks to Jessica Goad, Manager of Research and Outreach for the Public Lands Program at the Center for American Progress.

I guess you don’t need anyone to tell you gas prices are back on the rise:

But then what do we need local media for?

So maybe those folks who said there’s just one person writing all the news were right….

Add your punchline in the comments.

Cross-posted from Huffington Post

Given the relentless “all of the above” energy strategy pursued by the Obama Administration, the release this past Friday of a positive environmental impact report for the proposed Keystone oil pipeline was no big surprise. The U.S. State Department essentially declared that since the extra-dirty tar sands oil designated for the pipeline was going to be shipped and burned one way or another, building the pipeline down from Canada to Gulf coast refineries would not have that much impact on the environment — despite warnings from climate scientists that burning all the tar sands oil would be “game over” in the fight to stop climate change.

This conclusion by the State Department was a laughable bit of self-fulfilling logic. But perhaps the biggest surprise in the report was the tacit admission that the tar sands oil isn’t going to be burned in the U.S. at all. Instead, it is destined for refining and export overseas.

The State Department report details how Gulf Coast oil refineries will use the tar sands crude oil delivered by Keystone to replace supplies from Venezuela and Mexico, refine the crude into high-end products like gasoline, and then export the refined fuel overseas. Meanwhile, as if to add insult to injury, fuel prices paid by U.S. consumers in the Midwest are expected to jump as the pipeline will siphon off crude oil supplies that are currently landlocked in America. The U.S. State Department did not, of course, highlight these findings at the top of its report but instead buried them down in the “market analysis” section, where it left a clear trail of breadcrumbs.

Interestingly, the State Department went way out of its way to argue that the pipeline won’t be used to export unprocessed crude oil. (Though the industry clearly expects otherwise: see here.) Yet at the same time, the State Department admits, using painstakingly disconnected phrasing, that the crude oil delivered by the pipeline will be processed by Gulf coast refineries and then exported, in a shell game whereby export refineries replace declining crude oil supplies from Venezuela and Mexico with Keystone Canadian tar sands oil.

Regarding the pipeline’s impact on the export of refined crude, the State Department report says: “…future refined product export trends are also unlikely to be significantly impacted by the proposed Project.”

And what exactly are those trends? The State Department reports that: “In 2005, exports began increasing… Export volumes have increased to over [3 million barrels of oil per day] in the first half of 2012. This increased volume of refined products is being exported by refiners as they respond to lower domestic gasoline demand and continued higher demand and prices in overseas markets.”

And why use the extra dirty crude oil to be delivered by the Keystone Pipeline? The State Department says: “Gulf Coast refiners’ traditional sources of heavy crudes, particularly Mexico and Venezuela, are declining and are expected to continue to decline. This results in an outlook where the refiners have significant incentive to obtain heavy crude from the oil sands.”

And there you have it, a shell game, with Keystone as the lynchpin for the whole effort. Gas prices go up for Midwesterners, big oil refineries profit from the overseas export of fuel processed from dirty tar sands oil, and the rest of us are that much further in the hole in our fight to stop climate change. The environmental impact statement appears to be a clear signal that the Obama Administration is headed down the road to approval. However, the growing backlash against the pipeline creates a headache for the president who just made a very public commitment to protect the climate. A fight is clearly in the works.

– Hunter Cutting is a consultant and writer.

On Monday, USA Today reported that the price of gasoline hit $3.60 a gallon for the first time since October — an early start in comparison to the usual price rise seen in the spring. The increase occurred despite world oil production climbing to 88.8 million barrels per day in 2012, about 2 million barrels higher than two years ago according to the Washington Post’s Brad Plumer. And about half of that increased production is due to an oil boom in the United States that’s driven imported oil to its lowest level since 1987.

That increased oil production will bring down gas prices is one of the most reliable Republican canards when it comes to energy, so what gives?

As Plumer points out, “The big thing to remember is that oil prices are a function of both supply and demand. If world demand for oil rises faster than producers can pump the stuff out, prices will go up.” Plumer cites a piece by James Hamilton of UC San Diego, which shows China’s consumption of oil is booming, and that the world economy as a whole is growing apace — and thus demanding more oil — even as fuel efficiency increases.

Technically, the world isn’t even producing enough oil to keep pace with the rise in global incomes. Oil supply has risen by 2.3 percent since 2010. But the world economy has grown by 7.1 percent since then. The only reason that oil prices haven’t soared to record highs, Hamilton points out, is that countries have been undertaking new conservation measures. Americans, for instance, are buying more fuel-efficient cars in droves.

Granted, oil prices would almost certainly be even higher than they are now without the drilling boom over the past two years in places like North Dakota. But at this point, the extra drilling is struggling to keep up with the pace of global economic growth.

Here are the global production and consumption numbers for the last few years from the U.S. Energy Information Agency (note the numbers to the left start at 84,000 thousand barrels per day):

And despite forecasts from BP and the International Energy Agency that domestic and global oil production will continue rising, Plumer notes that high gas prices aren’t going away anytime soon:

The [IEA] recently projected that U.S. oil production would continue rising through 2020 and beyond, as companies extract more “unconventional” oil from shale rock and other sources. But global demand was also expected to rise 35 percent between now and 2035, with China on pace to become the largest oil consumer in the world in the next two decades.

And that’s the optimistic scenario. Raymond T. Pierrehumbert, a geophysical sciences professor at the University of Chicago and a lead author on the third IPCC Assessment Report, recently pointed out in Slate that while going after unconventional oil remains profitable, and thus likely to continue, it requires ever greater effort to retrieve the same amounts of oil:

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While 2012 might not be a banner year for Big Oil profits, it wasn’t a bad one either. With just BP left to announce 2012 earnings, Big Oil earned well over $100 billion in profits last year, while the companies benefit from continued taxpayer subsidies. Average gas prices also hit a record high last year, showing how a drilling boom may help oil companies’ profit margins, but not consumers’ wallets.

ExxonMobil — now the most valuable company in the world, passing Apple — earned $45 billion profit in 2012, a 9 percent jump over 2011. Meanwhile, Chevron earned $26.2 billion for the year. In the final three months of the year, the companies earned $9.95 billion and $7.2 billion respectively.

Here are the highlights of how Exxon and Chevron spend their earnings:

ExxonMobil

Exxon received $600 million annual tax breaks. In 2011, Exxon paid just 13 percent in taxes. The company paid no taxes to the U.S. federal government in 2009, despite 45.2 billion record profits. It paid $15 billion in taxes, but none in federal income tax.

Exxon’s oil production was down 6 percent from 2011.

In fourth quarter, Exxon bought back $5.3 billion of its stock, which enriches the largest shareholders and executives of the company.

Exxon’s federal campaign contributions totaled $2.77 million for the 2012 cycle, sending 89 percent to Republicans.

The company spent $12.97 million lobbying in 2012 to protect low tax rates and block pollution controls and safeguards for public health.

Exxon CEO Rex Tillerson received $24.7 million total compensation.

Exxon is moving ahead with a project to develop the tar sands in Canada.

Chevron:

In October, Chevron made the single-largest corporate donation in history. Chevron dropped $2.5 million with the Congressional Leadership Fund super PAC to elect House Republicans.

The bulk of Chevron’s federal contributions came from the super PAC donation, for a total of $3.87 million for the 2012 cycle. 85 percent went to Republicans.

Chevron spent $9.55 million lobbying Congress in 2012, according to the Center for Responsive Politics.

Chevron paid 19 percent U.S. taxes last year (half of the top corporate tax rate of 35 percent), and received an estimated $700 million in annual tax breaks last year.

Chevron was fined $1 million for a refinery fire that sent 15,000 Richmond, California residents to the hospital. Though the company faces $10 million in medical expenses, Chevron earns it back in a couple of hours.

With Royal Dutch Shell and ConocoPhillips reporting $35 billion in combined profit in 2012, BP is the last company left to announce its profits for the year.

The U.S. is experiencing a domestic oil boom that could soon make it the world’s largest liquid fuels producer. And how has that surge in production impacted gasoline prices?

In 2012, Americans paid more for gasoline than ever before.

According to figures from AAA, the average price of gasoline in 2012 was $3.60 per gallon, making last year the most expensive in history. Here’s what the organization reported on December 31:

Today’s national average price for a gallon of regular unleaded gasoline is $3.29. While this price is more than 10 cents less than one month ago, it is 4.5 cents more expensive than one week ago and 1.6 cents more than one year ago. The year ended with an annual average of $3.60 per gallon – the highest on record and nine cents more expensive than the previous high of $3.51 in 2011.

In 2012, prices increased to begin the year as geopolitical tension with Iran mounted and the “fear premium” in oil markets propelled the national average price at the pump to a high of $3.94 on April 5 and 6 – more than 65 cents higher than the price to begin the year. While a resolution to the “fiscal cliff” negotiations in Washington could pressure gasoline prices higher to begin 2013, it is unlikely that this increase would be on par with a year ago. Continued economic concerns, weak demand and increased domestic crude oil production are likely to temper any seasonal price increase in the coming months.

High gas prices caused a fever pitch in political circles. The 2012 campaign season was filled with calls for a “drill-everywhere-drill-anything” approach to energy policy. During the February primary season, Republican presidential candidate Newt Gingrich released a plan to increase drilling and shut down the Environmental Protection Agency, which he claimed would lower gas prices to $2.50 per gallon. Analysts called it “absurd.”

During the general election, Mitt Romney unveiled an energy plan to “drill everywhere it can be done.” While Romney didn’t make any specific claims about how much it would lower prices at the pump, he did claim his plan would substantially lower prices for consumers.

However, while Romney and others made bold claims about how much their drilling plans would reduce gasoline prices, the opposite scenario played out: American oil production surged to historic highs; yet the average price of gasoline hovered at record levels for consumers. The year closed out as the most expensive ever for gasoline.

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by Daniel J. Weiss

During the first presidential debate, Gov. Mitt Romney was caught making misleading, incorrect, and flat out wrong statements.  FactCheck.org concluded that “Romney often stretched the facts” during the debate. The New York Times Editorial Page Editor’s Blog noted that “Various truth squads have identified at least two dozen factual misstatements by Mitt Romney in 38 minutes of debate time on Wednesday night.”

The myriad of misstatements in the first debate was not a unique incident, but is a frequent occurrence.  The Romney campaign repeatedly dissembles on gasoline prices and other energy issues. Its latest blizzard of energy untruths were released this week in a memo to reporters.

Here are the facts about gasoline and other energy issues by the numbers.

Prices

• None: The Associated Press found “no statistical correlation between how much oil comes out of U.S. wells and the price at the pump” after examining 30 years of data (see chart below).

• $4 per gallon: “The average [gasoline price] exceeded $4 a gallon for seven weeks during the summer of 2008, and it has never reached $4 under Obama” according to USA Today.

• 71 cents per gallon: increase in gasoline price since Speaker of the House John Boehner was sworn in.

• $23.39: added to the price per barrel of oil by “Speculation in Crude Oil” according to Forbes magazine.

• 8 percent: cut in Commodities Future Trading Commission staff under House passed budget authored by Rep. Paul Ryan (R-WI). The CFTC polices oil markets to prevent Wall Street speculators from driving up prices.

Domestic oil production

• 11 percent: increase in U.S. oil production between 2011 and 2012.

• 41 percent: of U.S. oil imported in 2012.

• 75 percent: increase in domestic oil rigs between 2009 and 2011.

• 1993: last time the U.S. achieved projected 2013 domestic crude oil production of 6.9 million barrels per day.

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