Oil industry profits expected to fall sharply

Earnings could be off 50 percent over last year due to lower barrel prices

HOUSTON – Big Oil is set for another big flop.

For the second straight quarter, Exxon Mobil, Royal Dutch Shell and most of the world’s largest oil companies are poised to report quarterly earnings that pale in comparison to a year ago, when results were buoyed by crude prices that topped out near $150 a barrel.

The April-June results may be somewhat better than first-quarter earnings, which were the lowest in several years, but declines of 50 percent or more from a year ago are likely to be the norm. That’s what happens when oil prices plunge more than 60 percent and slumping demand for gasoline cuts into refining profits.
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Natural gas prices have fallen sharply too as the world grapples with a severe recession that’s crushed energy consumption.

“Prices have come down so dramatically since the second quarter of last year, I think you can expect (earnings comparisons) to be off maybe 60 percent on average,” said Brian Youngberg, an analyst at Edward Jones.

AP