The true immediate costs for Shell Oil Company are untabulated. The company lost 60% of its production in the Gulf in the following weeks after hurricane Katrina. The Shell Company suffered intangible losses of employee moral and high turnover. Its tangible losses are not limited to losses in refining capacity, downed transporting pipelines, and downstream revenue from retail stores sales.
However despite these immediate losses Shell occurred, it remains the Worlds second most profitable oil and chemical manufacturing business, behind ExxonMobil. Its long term out look remains very strong. In fact, the Katrina disaster may turn out to be a catalyst for future company growth. Some of this growth most likely never would have been attained without the price shock following Katrina. Recently 3rd quarter profits for all the Worlds major oil suppliers were up, way up. Shell is no exception. Their quarterly earning have risen 68% to almost 9 billon dollars. These profit earnings have almost set a new world record in the history of profit making.
May reasons attest to the extremely unyielding 3rd quarter profits. The number one reason being such that the price of oil toped over $70 a barrel after the Katrina damage reports caused gas runs. These national gas runs were created from fear of limited supplies and inflating prices on the retail gas prices per gallon level. Although production dropped significantly in their southern region operations, Shell was able to make more profit per gallon nationally over the total cost of losses sustained from the Katrina incident. In fact, Shells U.S. production was only marginally affected with at most 20% total loss in U.S. production for only a few days after Katrina. The production nationally leveled off to being around 90% of the capacity of what it was pre-Katrina levels.
The Essay on Profit Center
The TallTree2 Hotel Casino is a 640-room resort complex featuring a full range of Nevada-style gaming with slot machines and table games. Besides the hotel and casino, it also operates four restaurants, two entertainment showrooms and three gift shops. Because of the economic environment at the time, TallTree2 wanted to improve its bottom line by launching a range of Special Events like golf ...
Refinery production before Katrina nationally operated at 96%. Oil companies have a vested interest in keeping the supply of oil limited to help prop up the price of oil. No new oil refineries in America have been built since the 1970’s. In fact several refineries have closed down, even a few of those being operated by Shell in the same Gulf Coast region.
The majority of Shells losses on the Coast will most likely be with its human capitol and the devastation it caused to its employees. Shell has taken a proactive role in attempting to retain its coastal workforce by helping to find temporary housing and continue payroll for a limited time period. These financial commitments are coupled with a pledge of 3 million dollars to the Red Cross and another million to be matched by Shell employees.
