NEW YORK – Big Oil continued to make big money in the second quarter.

Industry giants Exxon Mobil and Royal Dutch Shell on Thursday reported combined net income of more than $18 billion, because of higher prices for oil, gasoline and other fuels. Even BP, still paying for last year’s Gulf of Mexico oil spill, made more than $5 billion in the quarter.

To keep profits rolling in the long run, the industry must overcome some obstacles. High oil prices help profits, but they can also derail economic growth and energy demand by increasing prices for gasoline and other fuels. Oversized profits have led many, including President Obama, to call for an end to government tax subsidies for the industry. And to meet world oil demand that’s expected to rise to a record 89 million barrels per day this year, the industry needs to find new sources of oil.

The search is leading many in the industry back to the U.S.

Exxon, BP and Shell reported lower oil production from fields outside the U.S. in the second quarter. International production dropped in part because maintenance issues and entitlement programs in foreign countries forced them to take less oil as prices rose.

A wave of anti-government uprisings also swept through oil-producing regions in North Africa and the Middle East.

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As they announced their quarterly profits, oil executives said they will devote billions of dollars more to finding new deposits that will eventually bring more supply to the market. The executives also said they want to get back to work in the Gulf of Mexico, where deepwater exploration was shut down last year after BP’s massive oil spill.

Exxon, which announced a huge oil field discovery in the Gulf of Mexico in June, told investors Thursday that it would look to “safely and rapidly” develop the field located about 250 miles south of New Orleans. Shell said it’s trying to ramp up production in the gulf, where company wells are producing about 50,000 fewer barrels per day than before the spill. BP, the largest oil producer in the gulf, said it planned to get back to drilling there very soon.

Shell and others also will develop fields off the Alaska coast. And the industry has heavily invested in drilling for natural gas in underground shale deposits across the U.S.

In the April-June period, Exxon’s profits jumped 41 percent to $10.7 billion, the biggest since Exxon hit a corporate earnings record of $14.8 billion in the third quarter of 2008. Shell’s net income nearly doubled to $8.7 billion and BP earned $5.6 billion, compared with a loss of $17.2 billion last year.

Chevron Corp. is expected to enjoy a healthy profit bump as well — $7.19 billion, or $3.51 per share, on revenue of $78.2 billion, according to FactSet. Chevron reports today.

 


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