Prices at the gas pump, now nearly $4 per gallon in the US, are higher than warranted by the supply of oil, Chief Financial Officer Simon Henry said on a conference call, though he declined to say when prices may begin to fall for consumers.

“It’s a tighter market than it was, partly because of the loss of production in Libya which supports high-ish prices.

Not necessarily today’s level though,” he told reporters in a conference call.

Shell’s net profit was up from $5.48 billion a year earlier, while revenues rose 28 percent to $110 billion.

Shell said it produced 3.50 million barrels of oil per day in the quarter, down 2.6 percent from a year ago, due to the sale of assets, notably Shell’s share in some developed natural gas fields in Texas.

Without the sales, which contributed a net $635 million to profits, production would have been flat, Shell said.

“We continue to make good progress in implementing our strategy; improving near-term performance, delivering a new wave of production growth, and maturing the next generation of growth options for shareholders,” Chief Executive Peter Voser said in a statement.

Shares rose in early trading in Amsterdam.

“Like BP yesterday, a stronger than expected downstream (refining) performance is the key feature of the results,” wrote Evolution Securities analyst Richard Griffith in a note on the earnings.

BP, Shell’s major European competitor, reported first quarter net profit of $7.2 billion on Wednesday.

Griffith said that he expected production to rise in future quarters due to Shell’s heavy investment in new capacity.

“Start-up of major upstream (production) projects should see enhanced contributions from this area and enable RDS to continue to outperform its peers,” he said, repeating a Buy recommendation on shares.

After a decade of declining production, Shell has vowed to boost production to 3.7 million barrels per day in 2014, from a low of 3.15 million in 2009.

It has been spending at least $25 billion annually on new infrastructure since 2008, a level it plans to continue, and it has 20 projects expected to come on line in the coming three years.

Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers, said Shell’s performance provided a sharp contrast with BP’s.

“Whereas BP has had to reorganize its business model and turn its attention to the ongoing fallout from the Gulf of Mexico spill, Shell has continued to power ahead unabated,” he said. “Shell is well positioned for future expansion.”

CFO Simon said Shell resumed exploration and drilling earlier this month in the Gulf of Mexico under regulations adopted after the Deepwater Horizon blowout and oil spill one year ago. He said Shell already adhered to the new rules and they were unlikely to lead to higher operating costs.

“It’s good to be able to get back to work there,” he said.

However, he said Shell is braced for a raft of higher taxes from countries around the world as its profits rise.

Such tax hikes play a role in the company’s investment decisions, he said, pointing to an increase in British tax laid out in the budget recently passed in London. Simon said that was likely to kill plans for smaller gas projects in the North Sea.

US President Barack Obama wants to cut tax breaks for oil companies, but the idea has generally been opposed by Republicans who say the country must encourage investment in domestic production to reduce US reliance on foreign oil.

“It is a factor of the business we are in. When the prices go up, not just the governments but suppliers often look for a share of the additional revenues,” Henry said.

The company’s earnings based on the ‘current cost of supplies’ — a nonstandard measure which seeks to strip out one-time costs and changes in the price of oil literally in the pipeline — were up 41 percent to $6.93 billion, Shell said.

Production profits were $5.76 billion, up 30 percent, due to the rise in oil prices and asset sales. Global prices were up more than 35 percent from a year earlier, but Shell did not have the full benefit of that: about half of the company’s production is from natural gas, and gas prices have not risen as much as oil.

Refining and chemicals sales were up 57 percent to $1.17 billion, on a current cost of supplies basis. Shell said its refining operations benefited from better margins.

Demand increased and it used more of its capacity, as the company had less planned and unplanned maintenance of plants.