SAN RAMON (AP) — Chevron Corp. said Friday its fourth-quarter net income jumped 72 percent as rising fuel demand lifted oil prices and produced a sharp turnaround in its refinery business.

The San Ramon company reported net income of $5.3 billion, or $2.64 per share, for the final three months of 2010. That compares with $3.1 billion, or $1.53 per share, in the same part of 2009. Revenue climbed 11 percent to $54.03 billion.

Analysts had expected earnings of $2.35 per share on revenue of $60 billion, according to FactSet.

Chevron’s refineries, which make fuels and other petroleum products around the world, earned $742 million in the quarter, compared with a loss of $673 million a year ago. ConocoPhillips and Valero Energy Corp. reported similar gains earlier this week.

Still, refineries have posted huge losses in the past few years. The major oil companies have said they’re committed to shrinking their refining businesses or getting rid of them altogether.

The strong quarter may serve to make the business more attractive to a buyer.

Chevron plans to make refining a “less complex” business with 2,000 fewer jobs. The company’s U.S. refineries sold about 58,000 fewer barrels per day in the fourth quarter, mostly because gasoline and jet fuel sales dropped. Refinery sales were flat internationally.

Conoco said it plans to cut refining from 24 to 15 percent of its core business. Marathon Oil plans to spin off its refineries into a separate company.

Morningstar Inc. analyst Allen Good says now is a good time to act. The U.S. is expected to use less gasoline and diesel in coming years as Americans drive more fuel efficient cars. Refineries could have to meet tougher carbon emissions regulations. And foreign competition could squeeze margins even further, Good said.

“If you’re going to pick a time to spin things off, now’s the time,” he said.

Refining businesses struggled when oil prices hit record highs and then a global economic slowdown squeezed demand. They made a comeback in 2010 as a renewed thirst for gasoline and diesel helped lift fuel prices. And OPEC countries are producing more of the cheaper varieties of crude oil that many large refineries depend on to boost profits.

Chevron said refining margins increased in the fourth quarter, following a 2 percent rise in world petroleum demand. In the U.S., consumption in the final three months of 2010 reached levels unseen since 2008.

Valero’s profit margin jumped 49 percent in the fourth quarter. ConocoPhillips’ margins increased 88 percent for its international refining business and almost tripled in the U.S.

Chevron’s profit from oil exploration and production increased 16 percent to $4.8 billion as prices for oil and natural gas liquids rose. Average crude and natural gas liquids prices grew 13 percent in the U.S. to $76 per barrel and 16 percent in international markets to $79 per barrel. Natural gas prices dropped 13.7 percent to $3.65 per 1,000 cubic feet in the U.S. but increased 16 percent to $4.81 per 1,000 cubic feet internationally.

For the full year, Chevron earned $19.14 billion, or $9.48 per share, compared with $10.56 billion, or $5.24 per share, in 2009.

(© 2011 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

Comments (4)
  1. me says:

    profits rose 72% as fuel prices sky rockets.
    anyone else feels they ‘re being price gouged a bit?

  2. Booga says:

    The always had been, nothing new. Sad that no one does anything about it.