E-mail slip gives peek at Chevron’s energy trades

A nightmare mistake for one energy company employee has been a dream-come-true for several reporters.

On Friday, an employee with Chevron Corp.’s business risk unit accidentally sent an e-mail detailing profits from its Houston-based energy trading business to several news outlets. According to the reports from those organizations, the spreadsheets show almost two-thirds of Chevron’s profits so far for 2011 came from trading gasoline, heating oil and diesel.

“The second-largest U.S. oil company had year-to-date profit of $263.9 million from products trading in the Americas and Atlantic region as of yesterday, compared with $99.9 million from trading crude oil and liquefied petroleum gas, according to an internal document about trading,” Bloomberg wrote in its version of the story.

The Dow Jones version of the story that “… As of July 14, Chevron traders were involved in contracts to buy or sell at least 27 million barrels of oil and products in the physical and derivatives markets, enough to cover more than a day of U.S. demand.”

The employee appears to have been trying to send more routine information to the news outlets on Friday when the mistake occurred.

At least one other news organization, Argus Media, also received a copy of the documents, but Argus did not write a story on it.

In a statement to the news organizations, Chevron said it “is extremely disappointed” that they chose to publish information after being told it was accidental.

Chevron reports its quarterly earnings on July 29.

As both articles note, energy trading operations are common among many of the oil majors, with BP and Royal Dutch Shell also having active Houston-based trading operations.

The trading can be used for both the marketing of the physical oil, natural gas and gasoline the companies produce, as well as for locking in prices for the buying and selling those same products through financial trades known as hedges.

The companies can also use their in-depth knowledge of the physical energy markets to speculate on future commodity prices. From the reports, it appears Chevron has been doing quite well on its speculative trading.

Commodity speculators at banks and hedge funds have largely been blamed by pundits as the cause of run-ups in oil and gasoline prices in recent years, but a recent report by the Government Accountability Office notes that such trading organizations may not be doing as well as one might expect.

The report, which looks at all proprietary trading by several major institutions — not just commodity trading, since not all banks trade in commodities — notes that such operations account for a relatively small portion of revenues for the firms during good times but a disproportionately large portion of their losses during downturns.

“In 13 quarters during this period, stand-alone proprietary trading produced revenues of $15.6 billion—3.1 percent or less of the firms’ combined quarterly revenues from all activities.”

“But in five quarters during the financial crisis, these firms lost a combined $15.8 billion from stand-alone proprietary trading—resulting in an overall loss from such activities over the 4.5 year period of about $221 million.”