Houston’s Marathon Oil, the nation’s fifth largest refiner and petroleum product marketer, reported a surge in first quarter, 2011 earnings. The company posted earnings per share of $1.65, which is well ahead of analysts’ estimates and multiple times better than last year’s net income of 44 cents per share.
Sales at Marathon Oil were also significantly higher, exceeding twenty- one billion for the quarter. This represents an increase of more than 25% when compared to the same period of 2010.
Sales and profit increases for Marathon Oil are not that surprising and they can be directly attributed to the high cost of oil and gasoline. The per- barrel price of crude has not yet reached historic highs, but it is much higher than it was last year and oil companies have benefitted handsomely.
Other oil companies have enjoyed similar positive results for the first quarter of 2011. Exxon Mobil, Chevron, Conoco Phillips, and others have witnessed soaring sales dollars and ballooning bottom- line profits as oil prices continue to climb.
A sharp decline in consumer demand, similar to what happened in 2008, could send oil prices plummeting rapidly, but analysts estimate that we won’t see the sharp drop in demand this time around. As long as prices at the pump hover around the four dollar per gallon range, consumers will continue to drive and oil companies such as Marathon Oil and others will continue to reap the financial benefits.
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