Profits surging along with gas prices

SAN RAMON, Calif. — Driven by soaring gasoline prices, ChevronTexaco Corp.’s first-quarter earnings climbed 33 percent, continuing the oil giant’s recent run of gushing profits.

The San Ramon-based company said Friday that it earned $2.56 billion, or $2.40 a share, in the three months that ended in March, up from $1.92 billion, or $1.81 a share, at the same period in 2003.

This year’s results outstripped the mean estimate of $2.02 a share among analysts surveyed by Thomson First Call.

First-quarter revenue totaled $33.6 billion, up 9 percent from $30.8 billion last year.

With the fast start, ChevronTexaco is well on its way to improving on its performance in 2003, when the company earned $7.2 billion — more than in the previous two years combined.

Investors were pleased. ChevronTexaco’s shares gained $1.15 to $91.50 during Friday’s trading on the New York Stock Exchange. The company’s stock is up by nearly 40 percent since the end of 2002.

Encouraged by its success, ChevronTexaco recently announced plans to buy back $5 billion of its own stock to boost its future earnings per share.

The rising profits of ChevronTexaco and other major oil companies have squeezed the budget of motorists faced with gas prices that have soared above $2.50 a share in some parts of the country, including ChevronTexaco’s home turf in California.

ChevronTexaco credited higher gas prices for a big chunk of its first-quarter earnings. The U.S. division responsible for oil refining and gasoline sales recorded a first-quarter profit of $276 million, nearly quadrupling the $70 million it earned at the same time last year.

The recent spike in gas prices has prompted some pointed criticism among politicians and consumer groups, who believe oil companies are gouging motorists to fatten their bottom lines.

"This is not just a lucky industry," said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights, a Santa Monica activist group. "The oil companies simply have been pumping up the prices for a commodity that everyone needs so they can make as much money as possible, even though they already have been raking in the biggest profits in their history."

ChevronTexaco chairman David O’Reilly expressed frustration at the backlash during the company’s annual shareholders meeting earlier this week. Responding to a question, O’Reilly pointed out that gasoline prices have remained a relative bargain on an inflation adjusted basis during the past 50 years, and openly wondered that a recent government-mandated increase in milk prices hasn’t sparked a consumer outcry.