The pain … and the gain

Major oil companies begin reporting robust first-quarter profits today in a string of earnings announcements likely to cheer their shareholders and infuriate motorists pumping $3 gasoline into their tanks.

“I don’t demonize the oil companies, but I know the crowd will have a lynch-mob mentality” when hit with multibillion-dollar oil earnings every day this week while coping with near-record gasoline prices, says analyst Tom Kloza of Oil Price Information Service.

The big profits come against a backdrop not only of high fuel prices, but also scattered gas shortages along the heavily populated East Coast. Congress is talking about imposing new taxes on oil companies and pushing harder for antitrust investigations of possible price manipulation. President Bush plans to announce in a speech today that he has asked the Energy and Justice departments to open inquiries into possible cheating in the gasoline markets, White House press secretary Scott McClellan said.

The spotlight on Big Oil is more intense than at any time since allegations of gouging and price manipulation erupted after Hurricane Katrina closed oil and natural gas operations in the Gulf of Mexico last August. Eight months later, 22.3% of Gulf oil production remains shuttered. What’s different this time, what could make it more uncomfortable for oil companies, is that the fresh outrage comes atop leftover ill will from energy price increases after Katrina.

USA Today