updated 4/27/2007 12:06:22 PM ET 2007-04-27T16:06:22

Coming off three straight years of record profits, Chevron Corp. on Friday reported its earnings surged yet again to start 2007 as the oil company cashed out of a Netherlands venture and cashed in on lucrative refining margins that have contributed to high gasoline prices.

The 18 percent increase in Chevron’s first-quarter profit delivered another reminder of the oil industry’s moneymaking prowess. That prosperity has added to the aggravation of motorists digging deeper to fuel the cars and renewed a political push to impose a windfall tax on the industry.

Chevron earned $4.7 billion, or $2.18 per share, during the first three months of the year, compared with net income of $4 billion, or $1.80 per share, at the same time last year.

The San Ramon-based company turned a higher profit despite a 12 percent decline in revenue, to $48.2 billion during the period.

The profit included a $700 million gain from Chevron’s sale of a minority stake in a Netherlands refinery. If not for that one-time boost, Chevron said it would have earned $1.86 per share. That figure exceeded the average estimate among analysts surveyed by Thomson Financial.

Chevron shares fell 62 cents to $77.56 in midday trading Friday on the New York Stock Exchange.

Like its industry peers, Chevron benefited from gas prices that have soared beyond $3 per gallon in some parts of the country. The company is the biggest seller of gas in California, where fuel prices have been among the highest nationwide.

Excluding the Netherlands sale, Chevron’s profits rose 59 percent to $923 million in its “downstream” operations — the company arm that refines oil and sells gasoline.

That helped the company overcome lower prices for crude oil and natural gas that contributed to a 16 percent decline to Chevron’s income from exploration and production operations during the first quarter.

Chevron probably would have made even more money during the first quarter if not for maintenance work and a fire that shut down a major refinery in Richmond for most of the period.

The oil industry can more easily afford those kinds of operating hiccups with oil selling for as much as it has in recent years. Although they have fallen from last summer’s peak of nearly $78 per barrel, oil prices remain above $60 per barrel — a level that once seemed unsustainable, said Oppenheimer & Co. analyst Fadel Gheit.

If prices continue to hover, “the oil industry won’t be in the oil business much longer. It will be in the money business,” Gheit said.

The favorable market conditions have enabled Chevron to earn $45 billion during the past three years, with its profit growing progressively higher each year.

Exxon Mobil, the only U.S. oil company larger than Chevron, has fared even better. Last year alone, Exxon Mobil earned $39.5 billion to break its own record the highest annual profit by a U.S. company. Exxon Mobil kicked off this year with a 10 percent profit increase to $9.3 billion.

Houston-based ConocoPhillips posted an 8 percent increase in its first-quarter earnings while profit at BP PLC, Europe’s second largest oil company, dropped 17 percent.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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