Chevron Soars to Record Profit as Consumers Feel Squeeze at Pump

SANTA MONICA, May 4, 2008 - Chevron today posted record first-quarter profits of $5.17 billion while the nation struggled with soaring gas prices climbing over $4 a gallon in some parts of the country.

Chevron joined the other Big Five oil companies in posting record first-quarter earnings riding on the cushion of soaring crude oil prices, Consumer Watchdog said, as it called on President Bush and Congress to act to cut the price of crude oil, which is largely driven by speculation in the commodity markets.

The quarter was Chevron's second best quarter ever. Chevron's profits from so-called upstream oil production soared 76 percent to $5.13 billion because of the soaring price of crude oil. Chevron's profit soared 10 percent to $5.17 billion from $4.72 in the first quarter of 2007.

The nonprofit, nonpartisan Consumer Watchdog called on Bush to immediately stop buying market-priced oil for the federal Strategic Petroleum Reserve, which is at record high levels above 700 million barrels, and start selling a fraction of the reserve back into the market. The group and its Oilwatchdog.org project have also called for Congress to quell market speculation and end taxpayer subsidies to oil companies.

"We've seen proposals for a gas tax holiday from the presidential campaign trail, but in fact these are little more than political gimmicks," said John M. Simpson, consumer advocate with Consumer Watchdog (formerly the Foundation for Taxpayer and Consumer Rights). "President Bush and Congress must act immediately and take the obvious steps to end the crisis that threatens not only every consumer but our entire economy."

Consumer Watchdog said there is no strategic benefit more important than using the oil reserve to aid consumers and offset energy inflation. But Bush continues to turn a deaf ear to such calls. At a Rose Garden News Conference this week Bush refused to stop purchases for the reserve. He also blamed Congress for not allowing oil drilling in the Arctic National Wildlife Refuge (ANWR) even though it would take a decade before oil could be obtained if drilling were allowed today.

Independent oil analyst Tim Hamilton was also skeptical of proposals for a gas tax holiday saying they might be well intentioned, but wouldn't work. "The price at the pump is set by the oil companies to ration the available supplies of motor fuel," he said. "If the tax came off, consumers and truckers would simply be disappointed as the oil companies raised the price the same amount, effectively transferring all the suspended tax into the corporate coffers, which are already overflowing from the record profits."

Chevron said it bought back $2 billion of its own stock.

"This is money that could have been invested in alternative energy research or capital expansion. It's wrong to use their excessive profits to buy shares and drive up the stock price," said Simpson. "That only benefits executives whose excessive bonuses are tied to stock performance."

The company said its refining profits were little more than break-even because it could not pass through the soaring cost of crude oil. Executives from the other Big Five -- ConocoPhillips, Shell, BP and Exxon Mobil -- in announcing their results over the last week all said they had been unable to pass through all costs of higher crude. The current upward spike in pump prices is unlikely to stop even if crude oil prices abate, because refiners are now working to boost profits on that end of the business.

Consumer Watchdog has called for:

-- Action by President Bush to stop adding to federal Strategic Petroleum Reserve and sell from the reserve to stabilize and drive down oil futures price. Dianne Feinstein and Carl Levin) would regulate trading markets to help stop speculative oil pricing. Regulators should also increase the amount of margin funds that traders must put up in energy markets to help suppress speculation.

-- Senate approval of an alternative fuels bill (HR 5351) funded by withdrawing $1.8 billion a year in unjustified taxpayer subsidies to oil companies. This measure, passed by the House, has not been taken up in the Senate, where opponents are using a filibuster tactic to block passage. A similar House measure was removed from the federal energy bill by the Senate last year under pressure from the oil lobby.

-- Oversight of refinery operations, including regulation of national gasoline supplies. In the last decade, the average on-hand supply of gasoline has dropped from 30 days' worth to about 22 days. This makes prices increasingly sensitive to any cuts in gasoline production.