Profiteering or uncontrollable market forces: why was gas production declining as oil profits were increasing?
In the first quarter of 2011 Exxon Mobil earned nearly $11 billion, a 69% increase over its performance for the same period last year; Royal Dutch Shell turned a profit of $6.3 billion; BP, even with all of the ongoing costs connected to the Deepwater Horizon Gulf oil spill, made $7.1 billion. The profit reports are particularly galling as Americans are shelling out close-to-record prices for gasoline, approaching $4.50/gallon here in Southern California, but there’s something else amiss. Despite increasing demand, gasoline refiners are producing less gasoline and diesel fuel in the U.S. than usual for this time of year, and they’re exporting more of their product to foreign countries. There are several market forces at work, from uncertainty in the politics of the Middle East to interruptions in oil production from Libya to the North Sea, and oil speculators have been steadily driving up the price of oil on the international market. But with these profit reports one can’t help but feel a little gouged by high fuel prices. Is this profiteering or the naturally opaque forces of the oil markets?