International Herald Tribune Exxon adds it all up: $36 billion

"Exxon Mobil, the largest U.S. energy company, posted Monday the highest profit in U.S. corporate history, amplifying concerns over the good fortune of oil companies while soaring energy prices pressure consumers.

"This might be the best macroeconomic environment ever for oil," said Dave Pursell, a partner at Pickering Energy Partners, Houston-based research firm."

"Exxon's performance last year allowed it to surpass Wal-Mart as the largest company in United States, and by some measures Exxon became richer than some of world's largest oil-producing nations. For instance, its revenue of $371 billion surpassed the gross domestic product of $245 billion of Indonesia, an OPEC member and the world's fourth most populous country with 242 million people."

NPR Exxon Posts $10.7 Billion Profit for Fourth Quarter

"Exxon Mobil Corp. posts one of the largest quarterly profits in American history: $10.7 billion for the fourth quarter of 2005, up from more than $8.4 billion a year ago. Exxon is the latest oil company to post record profits as oil prices continue to rise.

Oil trader Phil Flynn tells NPR's Steve Inskeep that the difficulty of bringing oil to market and a dwindling supply will keep oil companies' profitability very high for years to come."

redux [11.07.05]
National Review Online Gaseous Politics

"Congress is clamoring for an investigation into why it is that when the price of oil spikes, oil companies make higher profits. This shouldn’t be a mystery for anyone with a high-school-level knowledge of economics, but that exalted category apparently doesn’t include much of the Democratic caucus nor Senate Majority Leader Bill Frist, all of whom favor a probe. The twin villains of the oil-profits story are easy to identify: One is called “supply,” and the other “demand.”"

"In any case, in a market economy, high profits and high prices are essential. They eliminate scarcity. Investors with visions of dollar signs filling their heads are now rushing into the oil business. That will increase supply. Pinched consumers, meanwhile, are already pulling back on their consumption. Compared with a year ago, gasoline deliveries declined 4 percent in September, the biggest drop in a decade. That will decrease demand. These two trends make for falling prices. Any political interference with this process through price controls or a tax on companies’ “windfall” profits will only preserve the conditions for scarcity."

redux [10.28.05]
The Seattle Times Exxon's quarterly revenue equals $45 million an hour

"More than a billion dollars a day, $45 million an hour, almost $340 for every living American — that's what Exxon Mobil reported in third-quarter revenue Thursday.

For the oil giant, that translated to $9.9 billion in net income.

The financial results drew outrage from politicians and consumer advocates who are suspicious of historically high U.S. gasoline prices.

Others, however, said the company was simply following the rules of free enterprise and reaping a bounty for high-risk investments in oil exploration in often politically unstable regions of the world."

The New York Times Strong Profits Put Oil Giants on Defensive
[requires 'free' registration]

"A sudden interruption in oil supplies sent prices and profits skyrocketing, prompting Exxon's chief executive to call a news conference right after his company announced that it had chalked up record earnings.

"I am not embarrassed," he said. "This is no windfall."

That was January 1974, a few months after Arab oil producers cut back on supplies and imposed their short-lived embargo on exports to the United States. Oil executives, including J. K. Jamieson, Exxon's chief executive at the time, were put on the defensive, forced to justify their soaring profits while the nation was facing its first energy crisis."

Washington Post Oil Doesn't Want Focus on Big Profit

"Grumbling already has begun on Capitol Hill: Last month, one senator proposed a windfall-profit tax on oil conglomerates, and yesterday, House Republicans warned energy companies against price gouging.

To deflect the damage, the energy industry is relying on an ad campaign that was escalating even before hurricanes Katrina and Rita blitzed Gulf Coast petroleum refineries. The print and television ads are designed to educate consumers and lawmakers with a "we're all in this together" tone."

Convenience Store News Oil Refineries' Huge Profits Predate Big Storms

"While gasoline shortages from hurricanes Katrina and Rita have caused some price spikes, DenverPost.com reported refiners' gross profit margins have been climbing steadily for the past year, long before the hurricanes hit. A Denver Post analysis shows that gross profit margins on gasoline at the nation's refineries have more than tripled from about $7 a barrel in September 2004 to $22.77 on Tuesday."

"According to the DenverPost.com , energy analysts and economists say refiners have been able to increase margins for two main reasons: limited refining capacity that can cause spot shortages of gasoline and lack of competition in the refining sector, such as big mergers that brought together companies such as Exxon and Mobil, Chevron and Texaco, and Conoco and Phillips have reduced competition. "

Public Citizen’s Critical Mass Energy & Environment Program No Competition: Oil Industry Mergers Provide Higher Profits, Leave Consumers with Fewer Choices [2001]

"The five companies with vertically integrated market power enjoyed significantly higher profits in both upstream (exploration and production) and downstream (refining and marketing) domestic operations. Exxon-Mobil enjoyed 2000 income 146% higher in upstream and 171% higher in downstream compared to 1999.A combined Chevron-Texaco merger enjoyed upstream income 220% higher and downstream 23% higher. Phillips-Tosco had upstream income 327% higher and downstream income 227% higher. Marathon had upstream income rise by 126% and downstream income rise 108%. BP Amoco-Arco had global upstream income increase 141% and downstream income increase 166%. Since these companies are enjoying significant income increases in every sector, this indicates that OPEC’s influence is not a major factor in the ability of the top five corporations to affect domestic gasoline prices."