Oil money still flowing

Bob Moon Oct 27, 2006
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Oil money still flowing

Bob Moon Oct 27, 2006
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MARK AUSTIN THOMAS: The price at the pump is cheaper. Crude prices are also down. But despite that oil companies are expected to rake in huge profits in the fourth quarter. Marketplace’s Bob Moon explains why.


BOB MOON: Profits for the oil companies are still high because oil prices are still high even though they’ve been dropping.

In reporting its near record profits for the year’s third quarter, Exxon Mobil said the average sale price for oil during the quarter was more than $65 a barrel. A year earlier, it was $58.

Americans may be relieved that prices are lower than they were a few months ago, but Energy Intelligence analyst Barbara Shook says the cost of oil remains high enough that profits will keep flowing through the rest of the year:

BARBARA SHOOK:“I think you’ll see fourth-quarter numbers not quite as robust as what you’ve seen in the second and third quarters, but they’ll still be healthy and the companies will still be quite profitable.”

In other words, earnings may have peaked for now. But Shook points out that besides being cyclical, profits for the industry can also be volatile.

SHOOK: “All it would take is one international incident. Anything could set the market off again.”

It makes for a riskier bet for would-be oil investors.

In Los Angeles, I’m Bob Moon for Marketplace.

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