Markey: Shell, BP Profits Up, Consumers Let Down

FOR IMMEDIATE RELEASE

Contact: Select Committee, 202-225-4081

Markey: Shell, BP Profits Up, Consumers Let Down

First Salvo of First Quarter Oil Earnings Nets More Than $16 Bil for Oil Cos.

WASHINGTON (April 29, 2008) – Today two of the world’s largest oil companies announced their profits for the first quarter and highlighted the increasing disparity between the earnings of oil companies and the strain of high gas prices on American families. Shell Inc. reported $9.08  billion in profits for the first three months of 2008, and BP listed $7.62 billion in earnings. Both figures are well above their earnings compared to this time last year, and with oil giants like ExxonMobil and Chevron still yet to report their earnings for the quarter, the total figures for the top five oil companies could easily outpace last year’s record take.

The companies did not appreciably increase production, but rather increased their earnings from skyrocketing oil and gas prices.

Chairman Edward J. Markey (D-Mass.) of the Select Committee on Energy Independence and Global Warming cited these earnings as yet another reason to temper the market and help consumers by releasing oil from the nation’s crude reserves.

“This is madness. Two oil companies made $16 billion in a quarter, a single American driver pays $3.60 for every gallon, and President Bush does nothing,” said Markey. “The Bush administration continues to refuse to help American families by ceasing the fill of our national oil reserves, and releasing oil to tamp down prices.”

Oil and gas both hit new records yesterday, with gas reaching an average of $3.60 a gallon at America’s pumps and oil hitting nearly $120 in trading Monday. A poll released today by the Kaiser Family Foundation cited gas prices as the number one economic worry among American families.

Shell in particular serves as a caution against claims that domestic drilling increases would alleviate short-term or long-term oil price problems. Shell recently bid for much of the rights to drill in the Chukchi Sea in Alaska, seeking 275 leases to the tune of $2.1 billion dollars. Even after that lease sale, and many others won by oil companies in the past year on some of the 80 percent of leases open to drilling in America’s waters, prices have escalated, not declined.

In contrast, the Select Committee heard testimony last week on the short-term benefits of ceasing to fill the Strategic Petroleum Reserve, and releasing oil from the reserve, which currently stands at 97 percent capacity with over 700 million barrels of oil. An expert from the Massachusetts Institute of Technology and a former Department of Energy official discussed how in 2000, during a period when oil prices were rising even as OPEC had increased supplies, then-Secretary of Energy Bill Richardson, under the direction of President Bill Clinton, authorized the release of 30 million barrels of oil. The MIT expert, Melanie A. Kenderdine, testified: “The results were immediate, in spite of the fact that oil had not yet moved into the market--demonstrating the psychological impacts on the market when the U.S. signals its intention to act. . . By the end of the year, actual oil prices had dropped from $30.94 to $20.38 per barrel, a 34% decrease.”

Calls for the President to halt the filling of the SPR have come from Speaker Nancy Pelosi, the presidential candidates, and many others. Chairman Markey has pushed to release oil from the SPR starting last fall, when prices were in the $80-range.

Even in the face of mounting evidence and political pressure to enact a more aggressive petroleum reserve policy to aid consumers, President Bush has rejected the idea to stop filling the reserve.

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