Oil company executives will be in the hot seat at a House subcommittee hearing Wednesday as U.S. consumers across the country complain about rising gasoline prices at the pump, where drivers paid record-high prices per gallon for fuel last month.
Petrol prices have risen amid rising crude oil prices
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Their highest in about 14 years. But market experts say that in some cases where consumers have been overcharged for fuel, there is a reasonable explanation for the climb.
“The main reason for the record high petrol prices in March was Russia’s aggression in Ukraine, against a tough global oil market,” said Brian Milne, editor, DTN’s product manager. “Oil demand has recovered rapidly from the epidemic lockdown, with the invasion of Ukraine advancing supply growth and the subsequent embargo on Russian oil exports raising concerns about supply disruptions and deficits.”
This is a matter of little comfort for U.S. drivers who paid an average of $ 4,353 per gallon for gasoline on March 11, the highest price on record, according to GasBuddy data.
Read: What does Biden’s historic decision to release oil reserves mean for the market?
See also: Rising diesel prices could hurt consumers more than record petrol prices
On Wednesday, the Democrat-led House Energy and Commerce Committee oversight and subcommittee on the investigation planned to have executives from major oil companies, including Chevron Corporation.
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ExxonMobil Corporation
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And BP plc
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Testify at a hearing titled “Gazed at the Gas Station: Big Oil and America’s Pain at the Pump.”
Politicians and consumers have noted that the rise in oil prices has led many oil companies to make huge profits. BP has made the highest profit since 2012 last year.
In the U.S. and Europe, profit-making could lead to calls for windfall tariffs or rising fuel prices, Exxon said in a filing late Monday that its first-quarter profit could be $ 9 billion, compared to 8.8 billion. In the fourth quarter
This is due to the change in crude prices from $ 1.9 billion to $ 2.3 billion and the change in gas prices up to about $ 400 million, Exxon said in filing. This will be offset by the thin margin of the chemical, the impediment to leaving Russia after the onset of the attack, and others.
Exxon is expected to report later this month, and Factset Consensus has called for a 2.17 adjustment for earnings per share, compared to a comparable EPS of 65 cents per share in the previous quarter.
Other major power companies have not yet released first-quarter updates, which is somewhat unusual in the tightly written world of integrated giants.
People look at the oil company’s profits and think they are “increasing.” [gasoline] Prices are arbitrary, but potentially not looking at “unprecedented” losses for those companies in 2020, says Patrick de Haan, head of gasbody’s petroleum analysis.
He said the idea of raising gas prices was not a “fair assessment” of the market. Oil companies, of course, do better when oil prices are high, but Guggenheim’s demands are a “voice of frustration” for the rise in oil prices.
Two to four days before oil prices begin to move in the right direction, fuel prices generally “fall back on growth and decline”, Saif de Han, and some “truths”. ‘Rocket’ and ‘feather’ prices, “given that” rocket “prices may rise and then gradually decrease.
But petrol stations are aware that the market was extremely volatile and the last thing they wanted to do was significantly reduce their prices, say, 10 or 15 cents per gallon, only to increase the wholesale price by 20 cents, he said.
According to the Energy Information Administration, in 2021, the price of crude oil was about 54% of the average retail price per gallon for gasoline. Thus, it is understood that a nearly 60% increase in U.S. oil prices from the same period a year ago to April 1 would lead to an increase in gasoline prices at the pump. April 4 Gasoline averages $ 4,175, 46% higher than a year ago, GasBuddy data shows.
But that doesn’t translate into huge profits for oil companies from selling gasoline. In a recent report, Jeff Lenard, vice president of strategic industry enterprise at the National Association of Convenience Stores, or NACS, said that only 39% of the country’s 145,000 fuel outlets carry branded fuel from one of the five major oil companies and 0.1% of U.S. fuel outlets. Owned by a large oil company.
The markup of a gallon of gas averages 30 cents, and after costs such as credit card fees, retailers “get a net profit of about 10 cents per gallon,” Lenard said.
U.S. drivers consume about 9 million barrels of gasoline a day. Multiplying by 365 days a year and 42 gallons per barrel, the average net profit of 10 cents-per-gallon adds up to an estimated ম 14 billion in annual profits from gasoline sales in the country – for all 145,000 fuel retailers, Leonard says.
“Demands for price hikes in the petrol supply chain are unreasonable, trying to sacrifice an industry under extraordinary regulatory supervision to distract American consumers from inflationary pressures,” said Milne of DTN.
Claudia Assis in San Francisco contributed to this story.
