Yearly Profits of Oil Industry Will Nearly Equal Treasury Cost of Federal Economic Stimulus Package
Santa Monica, CA -- The record run of 2007 oil profits, which came
as the U.S. economy slid into recession and consumer debt soared,
portrays an industry run amok, said the Foundation for Taxpayer and
Consumer Rights. Shell, world's second-largest oil company, racked up a
corporate record $27.6 billion annual profit in 2007 ($31.3 billion on
While Shell may have slightly "missed analysts' estimates,"
it's profit figures show that integrated oil companies continue to find
ways to increase profits even as the economy falls. In Shell's case,
the company replaced the refining profits of recent years by escalating
income from selling crude oil, often to their own refiners, said the
nonprofit, nonpartisan FTCR. Consumers and economies continue to suffer
Shell's yearly profit will be exceeded tomorrow by ExxonMobil,
whose profits are thought likely by analysts to top last year's $39
"With motorists paying $63 for a 20-gallon fill-up in
California and Northeasterners shelling out more than $2,000 on average
this season for heating oil, it's no stretch to expect a family's whole
federal "economic stimulus" payment this spring to go to energy-related
debt on their credit cards," said Judy Dugan, research director of FTCR
and its OilWatchdog.org
project. "The cost of the current stimulus package, estimated at about
$117 billion in extra national debt, is little more than the yearly
combined profit of the major oil companies."
While the housing collapse may have triggered recession, energy prices have deepened and will likely lengthen it, said FTCR.
"Oil and fuel prices are a cost everywhere in the economy, from
$300-plus fuel surcharges on airplane flights to Asia, to the price of
breakfast cereal," said Dugan. "Petroleum prices increase fertilizer
costs, and the trucker that delivered the cereal added a fuel
Economists have looked with worry at the Federal Reserve's
interest rate cuts, because oil prices have driven inflation even as
the rest of the economy sagged, noted FTCR. Rate cuts and the federal
stimulus package could push the economy toward the worst case,
stagflation, largely because of energy costs.
"Government turns a blind eye to wildly speculative crude oil
markets and record oil profits, while oil companies continue to receive
billions in tax subsidies," said Dugan. "These subsidies come from the
pockets of taxpayers and their children as federal debt soars."
Despite the U.S. economic slump, rising oil stocks and weak
demand, the price of crude oil remains around $90 a barrel. This is
largely due to the pressure of unregulated speculation, said FTCR.
FTCR has called for oversight of unregulated electronic energy
trading markets and of oil company refining operations, including
investment in new capacity and updating of aged, unreliable refineries.
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