Big Oil continued to make big money in the second quarter.
Industry giants Exxon Mobil and Royal Dutch Shell on Thursday reported a surge in earnings, helped by higher prices for oil, gasoline and other fuels. Even BP, still paying for the Gulf oil spill, made more than $5 billion in the quarter.
The windfall drew jeers from environmental groups that oppose tax subsidies for the industry. They said it shows the industry doesn't need extra help from the government, especially at a time when lawmakers need to chop billions of dollars from the budget.
"Why should those who are posting record profits be exempt from sharing the sacrifices we all will be making?" said Jacqueline Savitz, senior campaign director for Oceana, an environmental advocacy group.
President Obama said in April that he wanted to cut roughly $4 billion in government subsidies for oil companies. The industry argues that doing so will discourage oil companies from developing fields in the U.S.
Argus Research analyst Phil Weiss noted that oil profits appear huge in comparison to almost any other industry, but they're relatively tame when considering how expensive it is to extract oil from the ground. Exxon, for example, earned $10.7 billion after taking in a whopping $125.5 billion from April to June. That's a profit margin of less than 10 percent, much lower than margins for pharmaceutical, technology or service companies, Weiss said.
"Those businesses have much richer bottom lines," he said.
As they announced their quarterly profits, oil executives said they'll devote billions of dollars more to finding new deposits that will eventually bring more supply to the market. Much of that attention will be focused on the U.S.
In the April-June period, Exxon's profits jumped 41 percent. Shell's net income nearly doubled to $8.7 billion and BP earned $5.6 billion compared with a loss of $17.2 billion last year. All three missed Wall Street expectations, however, as they reported weaker oil production from fields outside the U.S. Foreign entitlement contracts force them to take less oil as prices rise, analysts said.
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