Over the past five years the price of oil has gone through wild swings — record highs are followed by more “normal” periods, sharp spikes alternate with modest troughs. Powering all this volatility is a complex mix of economics, political factors and industry developments.
A 2012 Congressional Research Service report, “Financial Performance of the Major Oil Companies, 2007-2011”(PDF), analyzes the business results of the five biggest firms operating in the U.S. market: ExxonMobil, Chevron, BP, Royal Dutch Shell and ConocoPhillips. The report notes that their combined revenues in 2011 were equivalent to more than 10% of U.S. gross domestic product.
The findings include:
- The average acquisition price for a barrel of crude oil for U.S. refiners was $67.94 in 2007, $94.74 in 2008, $59.29 in 2009, $76.69 in 2010, and $101.61 through November 2011.
- “Revenues increased by 24% from 2007 to 2008, as oil prices increased by 38%. From 2008 to 2009 revenues declined by 36% as oil prices fell by 36%. As the price of oil recovered by 28% from 2009 to 2010, the five firms’ revenues increased by 26%. 2011 brought a further 35% increase in oil prices, driving up the revenues of the five firms by 25%.”
- From 2007 to 2011, combined total revenues for the five major firms has varied from a low of $1.17 trillion in 2009 to a high of $1.83 trillion in 2011.
- In 2011, the revenues for the five major firms were $486 billion for ExxonMobil, $470 billion for Royal Dutch Shell, $386 billion for BP, $251 billion for ConocoPhillips, and $244 billion for Chevron.
- In 2011, net incomes for the five firms hit a five-year peak of $132 billion. ExxonMobil made $41 billion; Royal Dutch Shell, $28.6 billion; Chevron, $26.9 billion; BP, $25.7 billion; and ConocoPhillips, $12.4 billion.
- Total average crude oil production for the five firms was more than 9 million barrels a day from 2007 to 2010; in 2011, the total average fell to 8.6 million barrels a day.
“The oil industry tends to become highly profitable when the price of crude oil rises,” the report concludes. “Since increases in the world price of oil tend to reflect general economic conditions, political developments and the emergence of new markets, the increases in company profitability can be viewed as windfall gains.”
John Wihbey is a Policy Journalist and Editor at Journalist’s Resource, a project of the Harvard Kennedy School’sShorenstein Center and the Carnegie-Knight Initiative. This article is republished under terms of a Creative Commons license.