High fuel prices aided BP’s quick return to profitability

The Gulf Coast and its many of its residents are still languishing in the aftermath of the largest oil spill in U.S. history, with contaminated fish and shrimp habitats and lost tourism revenues, but BP is once again pulling in multi-billion earnings, fueled in part by the near-record gas prices that leave motorists fuming at the pumps.

BP posted $5.3 billion in earnings for the second quarter Tuesday, a remarkable reversal of fortune compared to the same time last year when it reported a loss of $17.2 billion. From absorbing costs associated with cleaning up and containing the spilled oil in 2010, BP has made a $22-billion swing back into the green, propelled by huge fuel profits and rewarding international drilling ventures. Total gains for BP so far this year are $10.8 billion.

In fact, it didn’t take long at all for BP to bounce back from the disastrous oil spill. After the Deepwater Horizon platform exploded on April 20 last year, BP returned to being lucrative in the following quarter, the third quarter of 2010.

BP said it will continue this trend into the foreseeable future. Said CEO Bob Dudley, “we expect the momentum of our recovery to build into 2012 and 2013 as new projects come on stream.” BP has nine new projects planned in Angola, the North Sea, and even the Gulf of Mexico that it says will boost production and help offset any lingering declines in productivity resulting from the Deepwater Horizon disaster.

“BP is a company that is changing rapidly,” Dudley said. “Having stabilized the company while living up to our commitments in the U.S., we will now increase our focus on performance and long-term value creation.”

At the same time, according to CNN, “BP said it completed the majority of its shoreline clean-up efforts in the second quarter.” While that news sounds great to investors, anyone living on the Gulf Coast knows that mats of thick oil and tar balls continue to wash up on shore and that clean-up and recovery efforts have a long way to go before restoring the beaches and wetlands to pre-oil spill condition.

Despite the sharp turnaround, BP’s performance is still disappointing to many investors. Second-quarter profits were lower than projected and market shares were down two percent ahead of the opening bell Tuesday.