Exxon Mobil Posts Largest Profit in History of US

[mustang84]

Exxon Sees Record Profits for Any U.S. Co.

By STEVE QUINN

AP Business Writer

DALLAS

Exxon Mobil Corp. posted record profits for any U.S. company on Monday -- $10.71 billion for the fourth quarter and $36.13 billion for the year -- as the world's biggest publicly traded oil company benefited from high oil and gas prices and demand for refined products. The results exceeded Wall Street expectations and Exxon shares rose nearly 3 percent in morning trading.

The company's earnings amounted to $1.71 per share for the October- December quarter, up 27 percent from $8.42 billion, or $1.30 per share, in the year ago quarter. The result topped the then-record quarterly profit of $9.92 billion Exxon posted in the third quarter of 2005.

Exxon's profit for the year was also the largest annual reported net income in U.S. history, according to Howard Silverblatt, a stock market analyst for Standard & Poor's. He said the previous high was Exxon's $25.3 billion profit in 2004.

Exxon's results lifted the combined 2005 profits for the country's three largest integrated oil companies to more than $63 billion.

ConocoPhillips said last Wednesday that its fourth-quarter earnings rose 51 percent to $3.68 billion, while annual income climbed 66 percent to $13.53 billion. Two days later, Chevron Corp. said its fourth-quarter earnings rose 20 percent to $4.14 billion, while annual income jumped 6 percent to $14.1 billion.

The oil industry's stellar results renewed talk among some politicians for a windfall profit tax that would push companies to invest more in new production and refining capacity.

Sen. Babara Boxer, a California Democrat who sharply criticized oil executives appearing before Congress in November, struck again on Friday. She called on the Bush Administration and the Federal Trade Commission to "put an end to gouging," then suggested that FTC stood for "Friend to Chevron."

But John Felmy, chief economist for the American Petroleum Institute, a Washington-based trade group, said Monday that the political rhetoric was "not a case based on fact."

"We invested somewhere in the order of $86 billion last year," Felmy said. "Then we have to treat investors appropriately otherwise we'd have the Eliott Spitzers of the world coming after us."

The results for Exxon's latest quarter included a $390 million gain related to a litigation settlement. Excluding special items, earnings were $10.32 billion, or $1.65 per share. The result topped Wall Street's expectations. Analysts surveyed by Thomson Financial predicted earnings of $1.44 per share.

Exxon shares rose $1.87 to $63.16 in morning trade on the New York Stock Exchange.

Quarterly revenue ballooned to $99.66 billion from $83.37 billion a year ago but came in shy of the $100.72 billion Exxon posted in the third quarter, which was the first time a U.S. public company generated more than $100 billion in sales in a single quarter.

By segment, exploration and production earnings rose sharply to $7.04 billion, up $2.15 billion from the 2004 quarter, reflecting higher crude oil and natural gas prices. Production decreased by 1 percent due to the lingering effects of hurricanes Katrina and Rita, which battered the Gulf Coast in August and September.

The company's refining and marketing segment reported $2.39 billion in earnings, as higher refining and marketing margins helped offset the residual effects of the hurricanes.

Exxon's chemicals business saw earnings, excluding special items, decline by $413 million to $835 million, as higher materials costs squeezed margins.

For the full year, net income surged to $5.71 per share from $3.89 per share in 2004. Annual revenue grew to $371 billion from $298.04 billion.

To put that into perspective, Exxon's revenue for the year exceeded Saudi Arabia's estimated 2005 gross domestic product of $340.5 billion, according to statistics maintained by the Central Intelligence Agency.

[Variance]

Maybe they'll pass their profits onto their multitude of loyal customers in the form of lower fuel prices. :AH-HA_wink:

Seriously though, what can I say except I wish I had stock in Exxon (or any oil company these days).

[Sixty8panther]

Sucking Fcumbags!

[z28luvr01]

Hah, the jokes on them. When the nice weather breaks, I'm riding my bike to work. Everyone who can should do the same. I hope they drown on all the surplus gasoline they'll have.

[trinacriabob]

Hah, the jokes on them. When the nice weather breaks, I'm riding my bike to work. Everyone who can should do the same. I hope they drown on all the surplus gasoline they'll have.

That's a thought. How far of a ride from home to work?

Me. I'm 2.8 miles away. I'm thinking of walking except I'm doing 50 to 55 a week now and don't like to walk when it's dusk.

I'll just make my contribution by driving 6s and 4s.

Edited January 30, 2006 by trinacriabob

[z28luvr01]

It's about 5-7mi, depending on how I go. At lunchtime when it's > 50* I'll break out the group's bike (which I am basically the only user of) and ride in the back woods for an hour. I estimate that I do about that distance. It shouldn't be terrible. I just gotta tune up my bike at home. I don't think I've used it in a few years.

[XP715]

Don't be so bitter, guys; The folks at Exxon are wonderful people. I drive a 1979 Cadillac Coupe DeVille with a carbureted 425 cubic inch V8; they mail me a thank you card whenever I fill up!

[Brandon Lutz]

It would suck for me to ride a bike to work. 40 mile cycling trip one way!

[Guest YellowJacket894]

It's proof that there's more to higher gas prices, if you ask me.

[mrmonte]

How much more proof do we need that we are all being ripped off. I read today in the NY daily news that the current spike is because of speculation in stock prices. Someone farts in Argentina and the price goes up there is some sheik that is pissed off and the price goes up any BS excuse and the price goes up. I dont believe any of it theres plenty of oil and the oil companys lie.

[Snate]

I wonder if this will prompt another useless round of government questioning and windfall taxes.

I mean one or two companies in an industry of 10 companies doing really good...fine no big deal. But every company in an industry having record profits...something is fishy there.

[Chris_Doane]

It would suck for me to ride a bike to work. 40 mile cycling trip one way!

But you'd have thighs of steel within a few weeks.

[Cory Wolfe]

Figures...

[sciguy_0504]

Someone farts in Argentina and the price goes up there is some sheik that is pissed off and the price goes up any BS excuse and the price goes up.

Funniest. Sentence. Ever.

Seriously, it is rediculous. When Congress was doing hearings on gas prices and the media was harping, gas prices went down. No one has been getting on the backs of oil companies for a while so prices have casually crept back up. After this earnings report, I think we will see some more outrage.

Anyone want to buy a new GMT900?

[Cadillacfan]

If the goverment ever decides to investigate their posted earnings(they won't), and they find out that the oil companies were indeed price gouging.. I'm sure all of the automakers would have a solid case against them since companies like GM and Ford had to completely revamp their line-ups and loose even more marketshare then before. Think at how much money the would all get.

Unfortunately.. this will remain a dream because the majority of our representitives(on all sides) probably have their hands in the oil cookie jar and they wouldn't want to loose that new yacht they just bought.

Edited January 31, 2006 by Cadillacfan

[Derek77]

Boy am I going to get ragged for this. I found a great explanation on this subject and why I am not mad at oil companies for making money.

Ask someone in your office, school ... whatever ... what the difference is between profits and profit margins.  See if they can come up with an answer.  Simply put, your profits are the money that's left over from gross revenues after you pay the costs of doing business.  Profit margins are the percentage of gross revenues that are left over after you pay those costs.

Now ... for those of you who went to government schools, let's expand on the explanation.  Let's say that the total gross revenues for a company for one year equal $1,000,000.  That's a million bucks.  This company spends $930,000 to bring in that million.  The difference between the one million and the $930,000 is $70,000. That's your profit.  Divide the $70,000 by the one million and you get 0.07, or 7%.  That's your profit margin.  Now let's say that the very next year the company sells twice as much product the second year and brings in two million bucks.  Let's also say that the cost of making those products doubles as well .. to $1,860,000.  How much money did you have left over?  Those of you who went to government schools get out your calculators .. the rest of you can figure it out in your head.  You have $140,000 left over.  That's your profit. 

Wait!  Your profits have doubled!  How dare you?  What are you doing, price gouging?  These are excess profits -- windfall profits -- and the government ought to step in immediately and take them away from you, you greedy capitalist pig! 

Hold on ... before we get carried away with our little price gouging rant here, let's grab those calculators again.  Divide the $140,000 in profits by the $2,000,000 in gross receipts and what do we have?  Why, it seems the answer is once again 0.07, or 7%!  The profits have doubled, but the profit margin remains exactly the same! 

The problem here is that few people know the difference between a profit and a profit margin.  When they read that oil company profits have gone up they have no educational basis upon which to balance the fact that oil company revenues have also gone up ... thanks to the increase in the price of crude oil.  Revenues go up.  Profits go up.  It's not really that hard to understand.

Now, as I've said, that explanation is rather simplistic.  The tragedy is that most Americans don't understand the concept of profits and profit margins even at that basic level.  Someone will now come along and point out that the oil company profit margins have been rising along with the profits themselves.  They're right.  You see, costs don't necessarily double when revenues do.  There are some costs that remain fixed even when the prices for raw materials (crude oil) increase.  This will mean that profit margins will also increase, though not anywhere near as much as profits themselves.  Is this necessarily a bad thing?  Hardly.  Just where do you think the energy companies, including the oil companies, get the money they need to explore for new sources of oil, to build new refineries, and to conduct research on additional or alternate energy sources?  That money comes from profits.  If profits increase due to high demand met by a scarcity of product the oil companies will be in a position to use increased profits to expand production and to search for new sources of oil.  If the government seizes these profits, as suggested by Hillary Clinton, then those dollars would not be available for energy company investments into expanding our energy resources.

A few other things to point out:

-Exxon Mobil doesn't set the price of oil, the world market does. They're just cashing in. That price is determined by supply and demand, and nothing else. Sorry. If you want oil to be cheaper, you have to drill for more of it, bring to market and drive down the price.

-The oil companies are doing what they're supposed to. It is the function of a public corporation to make as much money as possible for its shareholders.

-If we expect to drill for more oil...and refine more gasoline...where do people think the money to do that will come from? Reinvested oil company profits, that's where. Somebody has to pay for exploration.

At the end of the day, it is the environmentalists that are making oil companies rich. The tighter the supply, the bigger their profits.

[Derek77]

Here is another story on the subject. Maybe this will explain it better.

Data from the American Petroleum Institute — a lobbying group that represents the large oil companies — show that ExxonMobil's profit margin (the amount of profit they earn for each dollar of revenue) was 10.7 percent during the last three months of 2005. They made a dime of profit for every dollar they took in.

Exxon Clears More Than $100 Million Daily

[CARBIZ]

But isn't it interesting that OPEC, as led by the Saudis, was made to promise to hold oil at $30 a barrel for years to help the West out or else our economies would crash. Now, all of the sudden, oil doubles and we are told that it is because of Iraq/Sudan/China/Katrina.

What surprises me is that OPEC is taking this news quietly. I do smell conspiracy here. The last time oil was this expensive, it was OPEC's move and they were making the money. Now we are being told it is the market, yet the oil companies are making more money than most countries.

I, for one, am unimpressed.

[Petra]

Just where do you think the energy companies, including the oil companies, get the money they need to explore for new sources of oil, to build new refineries, and to conduct research on additional or alternate energy sources?  That money comes from profits.  If profits increase due to high demand met by a scarcity of product the oil companies will be in a position to use increased profits to expand production and to search for new sources of oil.

Somehow, I doubt it. After all, one of the reasons that gas got so expensive in the wake of Katrina was because a lot of the oil refineries in that area were destroyed. Now, tell me: Why should the oil companies bother to build new refineries, when they can charge $3/gallon because demand is outstripping supply thanks to, tah-da: A lack of refineries!

Oil companies, and, for that matter, any sort of energy company, do not want people to change. They want people to keep buying their products. Come to think of it, that is the same reason that GM has declined: They refused to accept changes in the marketplace, giving the customers what GM thought was best rather than what the customers want. Sooner or later, the time will come when oil is not longer a practical source of energy. If the oil companies are wise, they will invest in whatever new source of energy is coming. But I don't expect they will. They're just too haughty and set in their ways.

[Derek77]

Somehow, I doubt it. After all, one of the reasons that gas got so expensive in the wake of Katrina was because a lot of the oil refineries in that area were destroyed. Now, tell me: Why should the oil companies bother to build new refineries, when they can charge $3/gallon because demand is outstripping supply thanks to, tah-da: A lack of refineries!

Oil companies, and, for that matter, any sort of energy company, do not want people to change. They want people to keep buying their products. Come to think of it, that is the same reason that GM has declined: They refused to accept changes in the marketplace, giving the customers what GM thought was best rather than what the customers want. Sooner or later, the time will come when oil is not longer a practical source of energy. If the oil companies are wise, they will invest in whatever new source of energy is coming. But I don't expect they will. They're just too haughty and set in their ways.

One thing is, no one wants refineries in there back yard, because of looks, smells, and people think of the time when there were many refinery deaths from fires. The History Channel has a great Modern Marvels episode on Gasoline that explains things in good detail. I came away suprised that a gallon of gas only cost $2.30 nationwide. And again, The oil companies don't set the price of oil, the world market does.

[Petra]

And again, The oil companies don't set the price of oil, the world market does.

True enough, but what I meant was that oil companies are certainly not going to complain if the price of oil goes up dramatically. I guess if people really wanted the price of oil to go down, we'd have to find way to either make oil futures look very stable (unlikely), or cause demand to fall (also unlikely, but not as unlikely). I, too, am frustrated by events in the world constantly causing the price to increase, even events that are totally unrelated to oil futures.

Also, I will look into that History channel program... Thanks for the tip.

[Lance Truthhammer]

While you (Derek) are right to say that the world market plays a role in setting the price, which is to say that the oil companies are not entirely responsible, that's a bit incomplete. The price of crude is affected by the world market, supply and demand, among other things; but, the price of gasoline differs widely from country to country, for a number of reasons, from supply lines to taxes.

The big thing for the US before and, moreso, in the wake of Katrina is not that there is a lack of supply in the world market, but a lack of refineries at home. I read an article in Forbes, I believe, that explained the problem was a lack of refining capactiy more than anything else. Due to the fact that refineries are extremely hard to build (because of costs, and the reasons you mentioned), combined with the realization of huge profits in the status quo, companies find little incentive to invest in such costly new facilities - even if it would lower costs for the consumers.

Essentially, a windfall tax would encourage more investment. Although, I cannot imagine new refineries would top the list of investment options for these companies.

- E.S. Mail

[Sixty8panther]

Z:

It's pretty un-American to have to ride a bike to work out of necessity. This is the land of opportunity damnit. Besides how bad can the Cobalt be?

I'll never give up my V8 powered cars for gas prices... if fuel gets ridicilous we'll just figure ut a way to make a bio-fuel. Gasoline isn't the only combustible liquid.

Edited January 31, 2006 by Sixty8panther

[sciguy_0504]

GM and Ford should do an expose (french, not english term) on the oil companies. It would make for great TV.

[z28luvr01]

Z:

It's pretty un-American to have to ride a bike to work out of necessity. This is the land of opportunity damnit. Besides how bad can the Cobalt be? 

I'll never give up my V8 powered cars for gas prices... if fuel gets ridicilous we'll just figure ut a way to make a bio-fuel. Gasoline isn't the only combustible liquid.

I didn't really make that decision to save fuel and spite the gas companies (though it's a nice fringe benefit B)) I've just come to really enjoy bike riding and what it does for my muscles, lungs, heart, etc. At 5-7mi each way on slightly hilly terrain, I figure I can do it at least 2-3x a week.

[Flybrian]

It's pretty un-American to have to ride a bike to work out of necessity.

Its actually pretty unAmerican to not ride a bike to work out of necessity. Last time I checked, America was the land of doing-what-you-had-to-do-to-get-by-and-succeed. People do what they have to in this country and work towards better times.

[CARBIZ]

Seriously, if you were the CEO of Exxon, would you spend a billion dollars building a new refinery in North America, knowing full well that as soon as that refinery came online the price of your product would DROP?

The bottleneck is refinery capacity, not supply. Every summer we hear that the refineries haven't switched over from heating oil due to the cold/long/unexpected winter season so gasoline will be expensive, then every damned Fall we hear that heating oil will be expensive because of the long/hot driving season.

The Greenies are really playing into the hands of the oil companies here. When people protest the construction of a new oil refinery, do you think the oil companies give a damn?