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The Wall Street Journal: Oil News Roundup: July 28, 2006 7:36 p.m.


Crude-oil futures tumbled by more than $1 a barrel, settling at $73.20 on the New York Mercantile Exchange, on renewed hopes of a resolution of the violence in the Middle East. Here is Friday’s roundup of energy-related news:

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CHEVRON’S MISS: Chevron did its part to dissipate some of the public rage being directed at Big Oil these days, reporting — get this — disappointing quarterly earnings. Not that a $4.35 billion profit, on $53.54 billion in revenue, is anything to sneeze at. But Wall Street analysts, on average, expected a little more from Chevron’s earnings per share, and its stock fell 2.5%. A big expense to repair equipment damaged by last year’s hurricanes hurt results.

ENVIRONMENTAL DISASTER IN LEBANON: A black coat of oil now covers Beirut’s once-beautiful sandy Mediterranean shore, the result of a 110,000-barrel oil spill from the Jiyeh power plant, which was knocked down by Israeli warplanes two weeks ago. The spill has been described as Lebanon’s worst-ever environmental disaster.

•Eni’s Gain: Meanwhile, Eni SpA, Europe’s No. 5 oil company by market capitalization, reported a 21% gain in quarterly earnings, boosted by a robust performance in its core exploration-and-production division.

•Michelin Flattened: The earnings news was not so good for French tire maker Michelin, which reported a 29% drop in quarterly profit, due mainly to high rubber and oil costs.

•Conditional Approval for E.On Deal: German energy utility E.On AG said it received conditional approval for its $34.15 billion takeover offer for Endesa S.A. from Spain’s National Energy Commission, but balked at the regulator’s conditions.

•Trouble for Consumers: U.S. consumers face twin headaches of relentlessly high energy prices and a slowing housing market, the Associated Press reports.

•Burning Rubber: Despite strong opposition in neighboring Vermont, New York state has applied for a federal permit to allow International Paper Co. to burn used tires as fuel during a two-week air pollution test.

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Thursday’s Roundup:

ENORMOUS PROFITS: Exxon Mobil, the world’s biggest publicly traded oil company, reported the second-biggest quarterly profit in its history — and one of the biggest profits of all time — nearly $10.4 billion, 36% higher than a year ago. Its earnings, boosted by surging crude-oil prices, topped Wall Street forecasts, while its revenue of some $99 billion fell somewhat shy. Royal Dutch Shell, the world’s No. 4 oil company, reported earnings of $7.32 billion on revenue of more than $83 billion. High oil prices were enough to offset its Nigerian production woes. Such huge numbers should make the oil majors ever-less popular with a U.S. driving public paying $3 a gallon, on average.

BLACKOUTS IN LONDON: High temperatures have strained energy demand and led to blackouts in several U.S. cities this summer, and now London is feeling their pain. Blackouts struck more than 3,000 businesses in London’s major shopping district and part of the capital’s transit network and will likely continue through tomorrow.

•Surviving $100 Oil: If oil prices soared to $100 a barrel, U.S. growth would slow significantly and the automotive and airline industries would be hit particularly hard — but a recession would not result, Standard & Poor’s economists told reporters.

•More Trouble For Iraqi Oil: Just when things seemed to be turning around for Iraq’s oil production, they have worsened again, falling victim to constant sabotage, the Associated Press reports.

•Energy Dollars For Warming Skeptic: Coal-burning utilities are raising cash to finance further research by University of Virginia professor Pat Michaels, one of the few remaining scientists skeptical of the global warming harm caused by industries that burn fossil fuels, the AP reports.

•Fight For Yukos Assets: Competition heated up for the foreign assets of OAO Yukos, the AP reports, while its board chairman hinted that a mystery investor could make a last-minute offer to buy the company’s billion-dollar debts as bankruptcy loomed.

•Airlines Build Own Supplies: After narrowly avoiding jet-fuel shortages at several big airports last summer, some U.S. airlines are stepping up investments in fuel storage and pipelines, the AP reports, though executives say the industry is still highly vulnerable to supply disruptions.

•An Arm and a Leg: Drivers in Rochester, N.Y., may feel they’re paying an arm and a leg for gasoline at every filling station in town, but only one station has the guts to come right out and ask exactly that price, MarketBeat reports (scroll down until you see the giant photo). and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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