Oil and natural gas companies are not immune to the global

recession and the first quarter financial results underscore that.

During the first three months of 2009, oil and natural gas company earnings plunged
nearly 70 percent as dramatically lower oil and natural gas prices, combined with
low refinery margins, hammered the companies’ balance sheets. Demand for oil and
natural gas is down and prices are sharply below year-ago levels. Despite the plunge
in earnings, the industry is doing what it can to minimize laying off employees while
striving to maintain the long-term investments needed to deliver American consumers
the energy they need, vital to the nation’s economy and energy security.

What goes up can come down:

The case of oil industry earnings
In recent years, much media (and political) attention has focused on rising oil and
natural gas industry earnings, bolstered by record-high oil prices. But the oil and
natural gas industry, like other commodity businesses, is highly cyclical. It is an
industry that must make costly and often risky investments in long-term projects
to supply consumers with the energy they need to live, work and play. It is also an
industry that supports six million U.S. jobs, pays billions of dollars to the federal
government and strengthens the nation’s energy and economic security.

The declines in earnings for the first quarter of 2009 were as follows:

Oil Company Percent Change in Net Income

from a Year Ago
Royal Dutch Shell –55%

ExxonMobil –58%

BP –64%

Chevron –64%

ConocoPhillips –80%

Marathon –61%

Hess –108%

Occidental –80%

INDUSTRY AVERAGE* –60%

*Average as of May 8, 2009 with 23 oil and gas companies reporting earnings.

Unfortunately, these declines come at a time when Congress is considering huge

increases in taxes and fees on the industry that will likely lead to lower production
and increased imports. Now is not the time to kick the industry while it is down. We
have learned from previous mistakes on taxing the industry that ultimately consumers
and the retirees and other owners of oil companies will suffer because of it.

Learn more at API.org