WASHINGTON — Washington--Despite the furor over the steep climb in oil and gasoline prices from the Persian Gulf crisis, oil industry profits in the quarter ending this week are going to follow a mixed pattern, according to energy experts.
Some companies are expected to do extremely well, while others fare poorly, even showing a surprising loss in some cases.
The profits of even the biggest winners, though, will pale in comparison to those of Saudi Arabia, the largest producer in the Middle East.
The Saudi windfall is expected to be large despite its response to a burden-sharing appeal from President Bush. It is providing roughly $5 billion to $6 billion this year to back the U.S. forces in the region.
Meanwhile, the Justice and Energy departments are investigating widespread allegations of price gouging by the oil industry.
But a top Energy official said, "So far we don't see any major unfairness by the industry in its pricing practices.
"What we are seeing are market forces at work," he said. "So let's not accuse them of profiteering so early in the game. Let the books show whether their profits are unreasonable."
A Justice antitrust official said oil industry officials "have been very, very cooperative in our investigation."
"We are still in the early stages, but we don't see any clear cases yet of profiteering," he said.
Legislation in the Senate and House, mainly backed by Democrats and designed to combat price gouging during an economic crisis, appears to be floundering and to have little chance of passage this year as the congressional session enters its final weeks.
The administration is strongly opposed to the bill on grounds that it would require a vast bureaucracy to gather the pricing information and enforce the measure in the courts.
The Senate bill has gathered 21 sponsors, including Barbara A. Mikulski, D-Md., and the House bill has 41 sponsors, including Constance A. Morella, R-Md.-8th.
Even though the legislation is stymied, the public's anger over the price climb and the president's appeal to the industry to exercise price restraint apparently have had a decided impact.
Although motorists may be experiencing pump shock, oil industry experts say the industry has been restrained in jacking up the retailprice of gasoline, apparently to hold down profits and avoid the anti-profiteering legislation on Capitol Hill.
Gasoline prices have gone up an average of about 24 cents since the Iraqi invasion of Kuwait, but industry experts said an increase of 34 cents would have been justified to keep up with the skyrocketing price of crude oil.
"It is absolutely nonsense to say that the oil companies are profiteering," said Jim Murchie, an oil analyst with Sanford C. Bernstein & Co. Inc. a New York investment firm. "They have been holding the line, and while profits will be up for some, others are going to have a negative quarter."
The profit outlook depends on the mix of businesses in which a company is engaged.
With crude oil skyrocketing to more than $35 a barrel, compared with $21 at the time of Iraq's invasion of Kuwait, companies that are large producers will enjoy substantial profits in the third quarter.
To avoid a public outcry, those companies, like Amerada Hess, could lower their profits by running up large costs on their books or using other accounting devices.
Companies heavily involved in selling such refined products as gasoline may not fare as well if they must buy large amounts of crude oil to supplement what they produce.
An independent gasoline company engaged solely in retail operations could suffer a decline in profits or even a loss by not being able for competitive reasons to pass along to motorists the full wholesale gasoline price. Wholesale prices have risen more than 35 cents since the invasion of Kuwait.
"For companies that are sensitive to crude oil prices, it's going to be very good," said Philip L. Dodge, an oil analyst at Nomura Securities International Inc. in New York. "For refiners, it's going to be temporarily lower for the quarter. They haven't been able to pass on all the increase."
For most of the major oil companies engaged in an integrated business from production to refining, gasoline marketing and petrochemicals -- the third quarter is expected to be profitable, in some instances highly profitable.
"Profits are clearly going to be up . . . for the producers," said Arnold Safer, president of the Energy Futures Group in Bethesda. "Some of the refiners may do well too. Tight capacity will move up their profits."
A study by PaineWebber Group Inc. is forecasting quarterly earnings increases of more than 40 percent above those of a year ago for British Petroleum Co., Phillips Petroleum Co. and Unocal Corp.; about 20 percent for Amoco Corp., Chevron Corp. and Texaco Inc.; and 13 percent to 15 percent for Exxon Corp., Mobil Oil Corp. and Arco.
Before the climb in crude prices, PaineWebber had forecast no improvement in profits for such large producers of crude as Exxon, Chevron, Texaco, Mobil and Arco.
For most major companies, the higher crude prices are expected to more than offset limits they imposed on raising gasoline prices.