Marketplace Report: Oil Profits Up, Car Makers Hurting
ALEX CHADWICK, host:
Back now with DAY TO DAY. Car companies and oil companies need each other. But the profits of the two companies are not necessarily anything alike. That's all too clear in new reports of second-quarter profits from big oil and big car companies. Steve Tripoli from MARKETPLACE is with us. Steve, let's start with the oil companies reporting their profits today. ExxonMobil's profits are gigantic, and Royal Dutch/Shell also doing well.
STEVE TRIPOLI reporting:
Yeah. They didn't do too badly at all, Alex. ExxonMobil pulled in more than $10 billion in profits during the second quarter. That's the second-highest quarterly profit ever for a publicly traded U.S. company. Royal Dutch/Shell's profits were up 40 percent over last year's second quarter. They earned $6.5 billion. And we learned yesterday that another giant, BP, earned over six billion, and that Conoco-Phillips was at five billion. So these are pretty good times for oil-company shareholders.
CHADWICK: Not so good for gasoline buyers, though. A lot of them are complaining that the companies are just cashing in on high oil prices at their expense.
TRIPOLI: Well, you know, Shell's CEO says his company's high profits are more a matter of Shell's learning to function efficiently. ExxonMobil says it made a lot off of refining. But I asked an analyst this morning whether the high profits had a lot to do with high prices at the pump, and she just burst out laughing and said, well, it's hard to ignore.
So let's say the profits and gas prices are more than casual acquaintances. Whether the oil companies should be charging so much in this environment is an argument for others to have.
CHADWICK: Okay. Automakers now. General Motors lost big in the second quarter, $3.2 billion - lost that much. Hard not to notice that a big rival, Honda, made more than $1 billion. Are their fortunes - well, it sounds like they're heading in opposite directions.
TRIPOLI: Well, in some senses they are, but not so much as you'd think. There was actually some good news hidden in GM's numbers. The company made money, over $1 billion in the quarter, on its everyday business operations. So the losses were these one-time pains tied to job-cutting incentives and straightening out some of their obligations. So don't count GM out yet.
CHADWICK: But aren't Honda and, say, the Toyotas of the world doing well because they have fuel-efficient cars at the moment?
TRIPOLI: Well, things aren't quite what they might seem there, either, although those two companies are renowned for fuel-efficiency. The auto-industry analyst Rebecca Lindland of Global Insight says car companies' fortunes aren't just tied to fuel efficiency or the lack of it, by a long shot.
Ms. REBECCA LINDLAND (Auto-Industry Analyst, Global Insight): Fuel pricing has actually really played a very minimal role, especially in the U.S. market. When we look at, you know, what motivates a consumer to buy a vehicle, fuel prices are playing more into it, but at the end of the day, it also is a combination of lifestyle and utility.
TRIPOLI: So she's saying people buy those Hondas and Toyotas because they're good cars, not just because they're fuel-sippers.
By the way, since we're talking about big industries, later today on MARKETPLACE our series called Conversations from the Corner Office continues with a visit to one of the biggest homebuilders in America.
CHADWICK: Thank you, Steve. Steve Tripoli of Public Radio's daily business show MARKETPLACE, produced by American Public Media.