Oil Companies Raking In Profits With Reduced Refinery Production and Increased Exports Amid Rising Domestic Demand

It's hard to defend big oil if they adopt market positions that appear completely against consumer interests. There's an economic logic to trends, even economic necessity. Yet the bummer is that massive oil company profits feed the progressive left's demands for higher corporate taxes, and hence demands for ever larger spending initiatives. See Los Angeles Times, "Oil companies are making more money and less fuel":

Gasoline prices are skyrocketing — and so are oil company profits.

Exxon Mobil Corp. earned nearly $11 billion in the first three months of the year, a rollicking 69% increase over its performance for the same period last year. That's on sales of $114 billion.

It's the same story for the other big oil companies. Royal Dutch Shell turned a profit of $6.3 billion in the first quarter, and BP — despite lingering costs from the Gulf Coast oil spill — made $7.1 billion.

What they aren't making is fuel, at least not in normal quantities. And that's a key factor in their reinvigorated financial performance.

Despite increasing demand, refiners are producing less gasoline and diesel in the U.S. than usual for this time of year. They're also exporting more to foreign countries.

Add rising oil prices, and you get the kind of sticker shock at the gas pump that some analysts say could challenge 2008's all-time highs — with regular gas already averaging about $3.88 a gallon in the U.S. and $4.22 in California, more than a month before the summer driving season kicks in.

Motorists and consumer advocates are outraged at high pump prices and say refineries need to increase gasoline supplies to reduce fuel costs.

"This is a page torn right out of the handbook of gouge-onomics," said Charles Langley, senior gasoline analyst at the Utility Consumers' Action Network in San Diego. "We call it the law of supply and demand: They supply less product and demand more money for it."

RTWT.

Companies are playing close to the margin of production versus demand, as they don't want to flood markets after recently recovering from a business trough. But those exports on the side are simply efforts to maximize profits, and while perhaps justifiable internally, consumers won't be pleased and we'll have all kinds of jawboning from politicians. Again, until the demand flattens out a bit after the peak summer travel season, it's going to be easy pickings for the communist left's attacks on big oil.

RELATED: At ExxonMobile's blog, "Gas prices and industry earnings: A few things to think about the next time you fill up," and "ExxonMobil’s earnings: The real story you won’t hear in Washington."