Oil giant BP lagged behind its peers when it reported a drop in profits for the latest full-year period, to $20.85 billion from $22 billion in 2006. The drop was blamed on refining outages and rising costs. The oil company was not helped by losing its longtime CEO last year or a $373 million fine from the Department of Justice resulting from charges related to its oil refinery explosion in 2005 and a record of environmental damage and fraud.
And while BP has made suggestions that it’s been moving away from the company’s renewable energy division, weaker profits could mean an even paler shade of green for BP. Particularly when its oil company competitors are making money hand over fist compared with BP, and don’t seem too worried about their image on renewables.
Royal Dutch Shell last week reported a 23 percent rise in full-year earnings to a record $31.3 billion. Exxon Mobil posted the largest-ever annual profit by a U.S. company with earnings of $40.6 billion. For oil companies, being green may not pay — at least not in the short term.
BP did see its fourth-quarter profits rise, to $4.41 billion from $2.88 billion in the same period last year. But its net replacement cost profits dropped by 24 percent for the quarter, to $2.97 billion. The net replacement cost is a measure of how much it would cost an oil company to buy oil at today’s prices. It’s one way to take the rising (or falling) price of crude out of the equation to check an oil company’s underlying health. For BP, it’s not so good.