00:00So, look, let's start with those results. BP profit doubled, Aramco up 44 percent.
00:05But a lot of that is the Iran war pushing oil prices up rather than stronger performances.
00:11If that war ends tomorrow, do those profits just disappear?
00:15Well, I don't think the profits necessarily disappear if the war ends tomorrow,
00:20if we do see the straighter farmers opening and we see oil production return to previous levels.
00:27I do think that oil prices themselves will come down, but that doesn't mean that their profits are going to
00:34disappear.
00:34We're still seeing very high levels of a disconnect between crude oil and petroleum products.
00:42So, we've had a lot of refineries come offline, not just in the Middle East,
00:46but also there have been some major attacks on Russian refineries.
00:51And so, refinery capacity is actually quite strained.
00:54And so, there will still be areas to make money in this interim.
01:00So, while crude oil prices may come down, the price that people are paying or that need to pay for
01:06diesel,
01:06for gasoline and for other products will still be high.
01:09And in fact, there will be more money to be made as food oil prices go lower.
01:14There will also be backlogs in terms of fertilizers and other products that these companies can produce and sell.
01:21What about company performance?
01:23Because it's rare to hear a CEO say her own company hasn't been good enough.
01:27Is Meg O'Neill, the CEO of BP, actually fixing BP or just saying the right things while the war
01:33profits paper over the cracks?
01:35Well, I do think that the test will be in this, you know, not necessarily the post-war period,
01:41because we're not yet in the post-war period.
01:43But I do think that the test will be as, you know, as she continues to grow in this role
01:50as CEO
01:50and as the company continues, you know, what can she do to have the company perform better?
01:55I mean, look at Chevron in the United States.
01:58But the CEO there just said, hey, everyone is getting bonuses because we've done so well.
02:03You know, where are the areas that BP can identify that need improvement
02:07and what can they do to, you know, make it a better company?
02:11And that's really, I think, what you'd want to be looking for in, you know, the next couple of quarters.
02:15And Trump's been telling oil companies to cut prices at the pump, given how much they're making right now.
02:21Give back to consumers.
02:22Realistically, can they even do that?
02:24Or is oil priced globally in a way that makes that demand more political theater than a real option?
02:31Yeah, I would say that that's really political theater because, in many cases,
02:34these oil companies actually don't really have much control over the price at the pump anyway.
02:39Even though gasoline and service stations in the U.S. are branded with these big oil company names,
02:45they're not actually necessarily even owned by them.
02:47They're owned by other retailers who just license the name.
02:50And so it's really up to the retailers to set the prices.
02:54And right now, as I mentioned, we're really in a situation where gasoline and diesel,
02:59those supplies are very, very tight and crude oil prices are lower.
03:03And that's not being reflected in the prices that people are paying at the pump
03:07because there's such a tightness in refining capacity.
03:10And until, you know, we work through this,
03:12until we have more refineries come back online or we build more refineries in the United States
03:16or Europe builds more refineries or increases capacity, we may not see this resolved.
03:22And the companies are going to continue making money on this
03:25because there's simply no other way to, you know, to deal with it other than for demand to drop.
03:31That would bring prices down.
03:32But unless we increase supply, there really isn't a way to bring the prices down.
03:38Ellen Ward of Transversal Consulting, thank you very much.
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