Exxon results set records
Dems demand tax
By Steve Quinn
The Associated Press
Dallas – Exxon Mobil Corp. rewrote the corporate record books Thursday as the oil company’s third-quarter earnings soared to almost $10 billion and it became the first public company ever with quarterly sales topping $100 billion. Anglo-Dutch competitor Royal Dutch Shell PLC wasn’t far behind, posting a profit of $9 billion for the quarter.
Those results led Democrats in Congress to demand a new windfall-profits tax.
“Big oil behemoths are making out like bandits, while the average American family is getting killed by high gas prices and soon-to-be- record heating-oil prices,” Sen. Chuck Schumer, D-N.Y., said in a statement.
But Energy Secretary Samuel Bodman said President Bush opposes such a move and is instead considering a wide range of proposals to help cushion consumers, including the creation of an emergency reserve of gasoline and other refined products.
Thursday’s outsized earnings are a result of surging oil and natural- gas prices that pushed pump prices to record territory after Hurricane Katrina. They come on the heels of similar eye-popping gains reported this week by BP PLC, Conoco Phillips Inc. and Marathon Oil Corp. Chevron Corp. reports its earnings today.
Some Republican members of Congress called on the industry to invest in ways that will increase production so that consumers get a break at the pumps or when they pay their heating bills. But analysts said telling the industry how to spend its money was unfair, if not futile.
“Exxon is a good corporate citizen, but it does not work for the welfare of the country,” said oil analyst Fadel Gheit at Oppenheimer & Co. in New York.
Exxon chairman and chief executive Lee R. Raymond did not mention the record results in the company’s earnings release.
Instead, he noted that the world’s largest publicly traded oil company “acted responsibly in pricing at our company- operated service stations, and we also encouraged our independent retailers and distributors to do the same.”
Henry Hubble, Exxon’s vice president of investor relations, did note on a conference call the company’s record profit, which rose 75 percent in the quarter to $9.92 billion from $5.68 billion a year ago. He said the gains “reflect the strong commodity prices and our fundamental business model that is disciplined, straightforward and focused on generating value while managing risk.”
The previous oil-industry earnings record was Exxon’s 2004 fourth-quarter profit of $8.42 billion. Third-quarter revenue jumped to $100.72 billion from $76.38 billion in the prior- year period.
To put its performance in perspective, Exxon’s revenue for the three-month period was greater than the annual gross domestic product of some of the largest oil-producing nations, including the United Arab Emirates and Kuwait – even though it lost considerable production because of a string of hurricanes that battered the Gulf Coast.
Despite the profit surge, Exxon’s performance fell short of analysts’ expectations and its shares fell 60 cents to $55.60 Thursday on the New York Stock Exchange. U.S.-traded Class A shares of Shell rose $1.15 to $60.65 on the NYSE.
At Shell, third-quarter net income grew 68 percent to $9.03 billion from $5.37 billion a year earlier. Revenue at the London-based company rose 8 percent to $76.44 billion.
Good info.
Two comments in the article stood out to me – “Exxon is a good corporate citizen, but it does not work for the welfare of the country,” preceeded by this comment “But analysts said telling the industry how to spend its money was unfair, if not futile.”
The telephone industry in this country was regulated for a long time in pricing. As a critical tool to keep this country running it was deemed that even though the companies providing the service were allowed to make a profit they couldn’t charge whatever they felt like.
Gasoline usage will not decline much with increased price. The demand for it has little flexibility. And the increasing fuel costs have additional impact beyond the pump. As it costs more for companies to produce and distribute thier wares and services those additional fuel costs will be transmitted to consumers in the form of increased cost of goods and services.
Having said all that – I don’t believe taxing windfall profits will have any benefit for the average Joe or Jane. Price-control perhaps, but taxing the windfall profits of a company won’t change how much I pay for gas or goods and services. I don’t believe it’s the best way to go.