Gasoline prices increased by nearly 3 percent during the first quarter, while gasoline consumption was up 4 percent. American consumers spent $65 million more on gasoline during the last week of the quarter compared to the first week. This is a 6 percent increase in total spending between the first and last week. Rising prices and demand bring little surprise to the expected announcements that oil company profits are on the rise.
Oil company profits
||Estimated net income
||Financial Times profit predictions
||Other profit predictions
||Up 85 percent (FT)
||Almost doubled Q1 2009 earnings (Telegraph)
||Roughly doubled (FT)
||More than doubled (FT)
||Up 62 percent (BloggingStocks)
||Net income roughly doubled (FT)
||$6.56 projected, up 44 percent (Reuters)
||Up about 30 percent (FT)
||Up 35 percent (Reuters)
This increase in consumer costs and oil company profits is relevant to the upcoming debate on bipartisan, comprehensive clean energy and global warming legislation. Opponents of reform will claim that such legislation would increase prices. But the reality is that the status quo policies have already harmed American families. An analysis of household energy spending between 2002 and 2007—the nonrecession years—found that the average household spent $1,130 more on energy in 2007. Nearly 85 percent of this increase was due to the rise in gasoline prices.
The first quarter oil company profits and consumption data suggest that profits will continue to rise absent bipartisan, comprehensive clean energy legislation that reduces oil dependence, creates jobs, and cuts pollution. This data is another reminder that it is imperative for the Senate act to change the status quo.
Daniel J. Weiss is a Senior Fellow and Susan Lyon is a Special Assistant for Energy Policy at American Progress.