SAN FRANCISCO (Reuters) – Chevron (CVX.N) and Total (TOTF.PA) became the latest big oil companies to post sharp increases in profits as crude prices surged and refining margins improved along with global fuel demand.
The price of oil has risen comfortably above $100 a barrel, putting a squeeze on drivers and raising talk of a U.S. legislative pushback, as global energy demand and unrest in the Middle East and North Africa darken the oil supply picture.
"Growing geopolitical tensions and the aftermath of the earthquake in Japan will shift the balance of the global energy markets," Total Chairman Christophe de Margerie said.
The surge in the price of crude, the oil refiners' main input, has led to a $1 surge in the price U.S. drivers pay for a gallon of gasoline, angering consumers already beleaguered by years of recession, while crimping the recovery.
The oil price-boosted profits also masked production declines for both Chevron and Total, despite the many billions of dollars they spend each year to maintain steady output.
Michael Yoshikami, whose YCMNET fund manages $1.1 billion and owns Chevron shares, saw potential trouble for oil companies now that even U.S. Republicans with eyes on the 2012 election are talking of abandoning oil company tax breaks, along with the very real risk of oil prices falling sharply.
"At that point, it's going to be even worse for the energy companies because they're going to make money, but a lot less money -- they still have to spend on research and development and drilling costs, and they're still going to be vilified," Yoshikami said.
U.S. House Budget Committee Chairman Paul Ryan said on Thursday he supports cutting tax breaks for the oil industry as lawmakers search for ways to battle rising gasoline prices.
Chevron Corp, the second-largest U.S. oil company, reported a larger-than-expected 36 percent rise in earnings on Friday, but said output slipped nearly 1 percent to the oil-equivalent of 2.76 million barrels per day (bpd).
France's Total said on Friday adjusted net income, which excludes unrealized gains related to increases in the value of inventories, rose to 3.1 billion euros ($4.60 billion) in the first quarter, from 2.3 billion a year earlier.
Total's oil and gas output fell 2 percent to 2.37 million bpd in the first quarter.
It was a similar story for BP Plc (BP.L) and Royal Dutch Shell Plc (RDSa.L), though industry leader Exxon Mobil Corp (XOM.N) increased production with the help of its acquisition of natural gas company XTO. (Graphic of Oil Majors Q1 reporting: http://r.reuters.com/kex29r )
Chevron is planning $26 billion of capital expenditure this year, while Total said on Friday it would have to spend between $20 billion and $23 billion annually in the years ahead.
The numbers from Chevron and Total came a day after Exxon and Shell beat estimates with their profits.
Total's (TOTF.PA) report on Friday of a 35 percent increase in profit added to the market glow it enjoyed a day before when it announced it would take a majority stake in U.S. solar power company SunPower Corp.
Shares of Total rose 0.5 percent on Friday to 43.22 euros.
Chevron shares were up 0.5 percent at $109.40 in afternoon trading. The stock has gained 19 percent since the start of 2011, in line with Exxon shares.
(Additional reporting by Matt Daily in New York and Marie Maitre in Paris; writing by Braden Reddall, editing by Matthew Lewis)