Chevron Posts Most Profitable Year Ever

Jan. 27 - KGO (KGO) -- Just as we're all getting squeezed at the gas pump, Chevron is continuing its most prosperous stretch -- posting record profits. The San Ramon based company said today it earned $4.4 billion during the last quarter, making 2005 the most profitable year in the companies 126-year history.

Soaring oil company profits are happening at the same time consumers are grumbling about pump prices.

Mary Allen, gas station attendant: "They're coming in. They want to know why we're raising the prices. They think it's our fault the prices are going up. They think we have a choice in the matter, and we don't."

Consumers are contributing to those soaring profits. Despite the price spike, demand for gas today is higher than it was a year ago.

Economist Severin Borenstein of U.C.'s Energy Institute says consumers keep prices and profits high by not curbing consumption.

Severin Borenstein, Ph.D., U.C. Energy Institute: "They want to continue to have unlimited cheap oil to drive gas guzzling cars and the fact is, what that's going to require if we do that is a greater reliance on the world oil market that is increasingly tight."

Oil profits get a lot of attention, but they are not out of line with other industries.

Oil and gas company profits are just a hair below the average for U.S. corporations. And considering lower than the double-digit profit margins for banking, pharmaceuticals, software and semiconductors.

To keep gasoline flowing, oil companies say they will use a large share of profits on exploration of new sources.

For example, Chevron will raise spending by 35 percent this year. That's an increase of $3.8 billion from last year.

Exxon Mobil, Conoco Phillips and the oil industry as a whole are not far behind.

Severin Borenstein: "Now that the price of oil has skyrocketed over the last year, they're ramping up and looking for more places where they might be able to find oil that will be economic at $60 a barrel that probably wouldn't at $25 a barrel."

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