Chevron released its third quarter earnings on Friday, and they were weaker than the same quarter last year. The company made a mere $5.3 billion compared with $7.8 billion last year.
“This quarter’s earnings were solid, but off from their near-record level of a year ago,” Chairman and CEO John Watson said in a release to accompany the earnings announcement. “Crude oil prices were down and we had a heavy period of planned oil field maintenance which temporarily reduced oil and gas production in several locations. Foreign currency movements also hurt our results this quarter, while they benefited the year-ago period.”
People in this state might be curious about how California-based Chevron fared in the aftermath of the fire at its Richmond refinery in the Bay Area, which caused gas prices in the state to spike at the end of the summer (and contributed to something of a minor gas crisis in October when there were problems at several other refineries in the state).
The answer surfaced in the earnings release. Refining falls into Chevron's "downstream" business (versus oil exploration and extraction — the "upstream business"). The downstream business took a big hit year-over-year, with earnings down to $456 million from $704 million a year ago. That certainly doesn't sound great, and if you look at it in the context of how the upstream business performed, you can see an additional problem. Upstream dropped by over $300 million in earnings year-over-year — but it still brought in $1.12 billion for the quarter, more than double the downstream business.
As for the Richmond refinery fire's effect on Chevron's operations in the quarter, the company put 118,000 fewer barrels of crude oil into its refining network per day during the quarter. The bulk of that was because of the Richmond outage, the company reported. Still, it processed nearly 800,000 barrels per day in the third quarter.
Richmond didn't really hurt Chevron's earnings that much. What did hurt was the difficulty of generating a decent profit margin on the refining business. All the major oil companies are up against that.