Oil prices, which averaged a near-record $103 per barrel in 2011, have risen steadily since the beginning of 2012. In tandem with oil prices, gasoline prices are also rising—from an average of $3.30 ending the week of January 2 to $3.59 last week. Higher gas prices mean that money is flowing out of Americans’ wallets and pocketbooks and straight into the coffers of Big Oil companies. A Center for American Progress analysis finds that each penny rise in the average quarterly (three months) price of a gallon of gas corresponds to a $200 million increase in quarterly profits of the big five oil companies—BP, Chevron, ConocoPhillips, ExxonMobil, and Royal Dutch Shell.
Since the beginning of the year, the price for gasoline increased 29 cents per gallon. If that average increase holds true through the end of March, it will translate to $5.8 billion in additional profits for the big five.
CAP analyzed the past four years of average quarterly gas prices and total profits for the five largest oil companies and, not surprisingly, oil company profits are closely linked to gas prices. While gas prices aren’t the only factors influencing profits, they are a significant indicator. What’s more, we can confidently predict how much money each penny increase in gas prices transfers from consumers to the big five oil companies.
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