{
  "id": "RL33021",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "RL33021",
  "active": false,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 308872,
      "date": "2005-08-04",
      "retrieved": "2016-04-07T19:36:08.051029",
      "title": "Oil Industry Profits: Analysis of Recent Performance",
      "summary": "High prices for crude oil in 2004 and into 2005 have reduced consumers\u2019 purchasing\npower and\nraised costs for businesses while providing billions of dollars to the oil industry and oil exporting\ncountries. The industry\u2019s increased revenues have led to record profit levels. As the 109th\nCongress\nengages in oversight of recent broad energy legislation which aims to increase the domestic supply\nof crude oil to mitigate oil price increases in the longer term, another key factor in determining\nincreased supply is how oil companies decide to allocate their profits between shareholder returns\nand investment in oil production. This report is written in response to a number of requests from\nCongress concerning profits in the oil industry. This report provides background information\nconcerning the level of oil industry profits, the sources of those profits, and a discussion of the\npotential uses of profits.\n \n In response to the increased price of crude oil since the fall of 2004, profits of virtually all firms\nin all segments of the oil industry have increased. However, the greatest increases have been in the\ndownstream, or refining and marketing, segments of the industry. These increases in profit are\napparent whether the major integrated oil companies, the independents, or refiners are considered,\nlending some credence to the viewpoint that industry profits are the result of factors beyond the\nelevated price of crude oil. Historically, the current combination of high oil prices and high profits\nhave been seen before, and periods of low prices and profits tended to follow.\n \n The relatively high profit levels earned in refining and marketing suggest that conditions in the\npetroleum products markets, including the gasoline, diesel, and jet fuel segments, contributed to\nearned profits above and beyond the effect of higher crude oil prices. Key factors in these markets\nincluded tight refining capacity and low inventory levels. Mergers, acquisitions, and asset sales may\nalso have changed the relative profit positions of many firms in the industry. All of these factors\nhave been influenced by investment decisions in the oil industry.\n \n Firms in the oil industry are likely to use their recently earned profits in a variety of ways. They\nare holding record cash balances, buying back their shares and increasing dividends. Merger and\nacquisition activity in the industry again appears to be on the rise. In addition, the major oil\ncompanies are investing in a variety of energy related projects, although not necessarily oil, including\nliquified natural gas and gas-to-liquids technologies. These projects tend to be international in\nscope. In the longer term, investments in exploration, production, and refining capacity are likely\nto be needed to mitigate the high prices of 2004-2005.\n \n This report will not be updated.",
      "type": "CRS Report",
      "typeId": "REPORTS",
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}