Under a backdrop of $3 gasoline, the nation’s big five oil companies will report profits this week, with Colorado making a substantial contribution to their corporate coffers.
From gas station retail sales to oil-shale experimental projects to natural-gas production, Colorado figures in the bottom line for each of the five majors: BP, ConocoPhillips, Chevron, Exxon Mobil and Royal Dutch Shell.
Oil companies are expected to report second-quarter profits of $33.6 billion, or 32 percent more than a year earlier, according to analysts surveyed by Thomson Financial.
While the companies typically don’t break out profits by region or state, Colorado’s fast-rising natural-gas industry is a key contributor.
Four of the big five – BP, ConocoPhillips, Chevron and Exxon Mobil – accounted for 27 percent of gas production last year in Colorado. Estimated value of the oil majors’ share: $2.2 billion.
The fifth big company, Royal Dutch Shell, is not a major local natural-gas producer but has made headlines with its oil- shale research in western Colorado and a share of the state’s largest wind farm near Lamar.
Analysts say that because much of the nation’s natural-gas drilling is shifting to the Rocky Mountains and away from traditional production areas, Colorado natural gas is likely to play an increasingly prominent role in energy company revenues and earnings.
Gasoline sales are a mainstay of oil company operations, yet only three of the big five’s gas brands are sold in Colorado: Conoco, Phillips and Shell.
The stations represent a mixed bag of corporate ownership and independent owners that act as franchisees of the brands.
While debate regularly rages over who makes huge profits in the petroleum sector, an industry spokesman says retailers are misdirected targets of consumer ire.
“Who’s making the big money? It sure isn’t retailers,” said Roy Turner, executive vice president of the Colorado/Wyoming Petroleum Marketers and Convenience Store Association.
Turner said retail profit margins typically are less than 10 cents a gallon and sometimes evaporate to little or nothing.
For example, Turner said a typical Colorado retailer’s wholesale costs, including taxes, averaged $2.87 a gallon for regular Monday. And if customers pay with a credit card, it adds another 7 to 9 cents a gallon for processing costs.
That leaves little profit margin with Colorado’s average retail price at $2.95 Monday, according to a survey by the Energy Department’s Energy Information Administration.
The federal agency said the national average price for regular rose to $3 Monday, up 1 cent from last week’s $2.99.
Of the 10 cities surveyed by the agency, the highest price was $3.27 in Los Angeles. The lowest price was $2.90 in Houston. Denver’s average was $2.94.
AAA reported Colorado and U.S. averages of $2.99 Monday.
Staff writer Steve Raabe can be reached at 303-820-1948 or sraabe@denverpost.com.
$33.6 BILLION
Anticipated big five oil companies’ second-quarter profit, Thomson Financial says, up 32 percent from 2005
$0.10
Retailer’s rough profit per gallon of gasoline, according to the Colorado/ Wyoming Petroleum Marketers and Convenience Store Association
