Posted on 10/07/2006 7:05:50 AM PDT by kellynla
LITTLE ROCK -- If gasoline prices continue to drop, shareholders of Royal Dutch Shell PLC can take heart.
Lower prices create more demand, which will drive the price back up and bolster the profits of the big oil companies.
The president of the No. 3 oil company' U.S. division, John Hofmeister, made that point during a stop in Little Rock as part of a 50-city tour. Hofmeister said he has selected personal appearances over an advertising campaign as a way to explain Shell's take on the oil business to consumers.
He acknowledged that higher gas prices, $3 or even $2 per gallon, are a burden to lower income consumers. But he said the higher profits are enabling oil companies to develop greater refining capacity, better invest in future technologies and put money in shareholders' pockets through dividends and appreciation in share price.
In its second quarter results announced in July, Amsterdam, Netherlands-based Royal Dutch Shell saw its profit jump 40 percent, to $7.32 billion from $5.24 billion, despite production problems in the Gulf of Mexico and Nigeria. That was on overall sales that rose less than 1 percent to $83.1 billion. Profit in the division that refines oil and sells it to consumers increased 13 percent, to $3.02 billion.
"Our job is to sell gasoline," said Hofmeister, who has been Shell Oil Co. president since March 2005. Its U.S. division is based at Houston.
Hofmeister said the industry had watched China industrialize and consequently demand more oil. But, he said, a development that came as a surprise was the disappearance of excess capacity of 8 million to 10 million barrels per day in the Middle East. By 2004, he said that cushion was gone. Worldwide consumption is 85 million barrels per day.
(Excerpt) Read more at mywesttexas.com ...
Gee imagine that. Speaking Truth to Whiners
Where's the hysterics? I'm disappointed.
How does he plan to keep the dividends up when consumption levels and prices stabilize as his new refineries create a greater supply?
If the actual date of opening this expansion to an existing refinery is still some seven years away, that would only barely cover the increase in demand from now until then.
Oil prices worldwide walk a delicate tightrope. Too low, and they trigger exorbitant consumption (more SUV's and air conditioners), which in turn accelerates the rate of depletion. Too high, and they encourage alternate forms of energy (nuclear power, harvest of Methane Hydrate from ocean bottoms, Thermal Depolymerization of household and industrial waste, recovery of petroleum from tar sands and oil shale, coal to liquid fuel production, to name a few), as well as conservation and ever-higher degrees of efficiency engineered into consumer products and manufacturing techniques.
In that case, why bother?
So Shell's profit increased 40 percent on revenues that increased less than 1 percent. I'm kinda a novice at this here cipherin', but wouldn't that mean the cost increases we saw at the pump went to increase profts to Shell, not solely to pay for more expensive crude?
"why bother?" What?
Yes, but I'm NOT a Shell stockholder. I'm a Shell victim. Me and a few million other motorists.
"Shell victim?"
oh pulllezzzzzz...like there's no other gas stations you could buy your gas from. LMAO
you need this link
http://www.gasbuddy.com
Why bother trying to increase refinery capacity when the results are going to take seven whole years to achieve?
because ALL new refineries take years to complete...
and you have to touch first base before you can go home.
But I want everything NOW!
Do gas prices vary widely from station to station on your planet?
The profits Shell shows are duplicated across ALL the major oil producers. You can't be so naive as to believe that there's any REAL competition in retail gasoline ...
what are you so bitter & argumentative about?
I can't help it you didn't buy some oil stocks years ago.LOL
and yes fyi, the difference in gas prices on planet earth can vary up to a dollar a gallon depending on what state you live in.
now have a great day, 'cause I am!
Doesn't really have much to do with the subject, does it? Congratulations on your good fortune. No doubt you'd be equally gleeful if you'd invested in Xyklon right before the Nazis rose to power.
and yes fyi, the difference in gas prices on planet earth can vary up to a dollar a gallon depending on what state you live in.
Hogwash. The Shell station at the corner of Croesus and Mammon isn't going to sell gas at a dollar more or less than the BP station across the road.
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