While Americans die in Bush's blood for oil war, Exxon gets record profits:
Exxon Mobil Profits Soar on Surging Oil and Gas Prices
By VIKAS BAJAJ
and JAD MOUAWAD
Published: October 27, 2005
Exxon Mobil and other energy companies reported strong gains in their third-quarter profits today on surging prices of oil and gasoline both before and after the hurricanes struck the Gulf Coast.
The world's largest publicly traded oil company, Exxon Mobil said its earnings jumped 75 percent. Royal Dutch, meanwhile, said its earnings climbed 68 percent, and Marathon Oil said its earnings more than tripled.
Some of the increase in profits was attributable to rising oil prices this summer even before Hurricanes Katrina and Rita struck the Gulf Coast. After the hurricanes, though, the price of gasoline, diesel, jet fuel and other refined oil products soared because of shutdowns at refineries in Texas, Louisiana and Mississippi.
Exxon, based in Irving, Tex., outside Dallas, said the hurricanes took down 50,000 barrels of oil production a day and raised the company's costs by $45 million before taxes. Natural gas production fell 9 percent, to 7.7 million cubic feet a day.
The company's top executive appeared to address and deflect the public backlash that followed Katrina when gasoline prices soared past $3 a gallon in many cities.
"Following the hurricanes, Exxon Mobil maximized gasoline production from all of our refineries which were operating in the U.S., and increased imports from overseas affiliates to meet U.S. demand," Lee R. Raymond, Exxon's chief executive and chairman, said in a statement. "We acted responsibly in pricing at our company operated service stations, and we also encouraged our independent retailers and distributors to do the same."
But the news of the record profits by oil companies is sure to draw criticism by politicians and energy industry critics, who say the industry has not done enough to invest in increasing oil and gasoline supplies even as they earn billions of dollars.
Today, Exxon Mobil reported net income of $9.92 billion, or $1.58 a share, in the third quarter, up from $5.68 billion, or 88 cents a share, a year earlier. Revenue jumped 31.9 percent, to $100.7 billion, from $76.38 billion.
The company's profits included a special one-time gain of $1.6 billion from the restructuring of the company's stake in a Dutch gas business. Without that, profits for the third quarter were $8.3 billion.
This year, Exxon Mobil's nine-month profits - $25 billion - are so far equal to those of 2004, already a record year for the company. Its sales are on track to exceed those of Wal-Mart this year.
Meanwhile, Royal Dutch Shell, the world's third-largest oil company, reported third-quarter net income of $9.03 billion, $1.35 a share, up from $5.37 billion, or 80 cents a share, in the comparable quarter of 2004. Revenue rose 6 percent, to $94.7 billion, from $89 billion.
And Marathon Oil reported third quarter net income of $770 million, or $2.09 a share, up from $222 million, or 64 cents a share, a year earlier. Revenue jumped 40 percent, to $17.2 billion, from $12.3 billion.
This year is shaping to be an exceptionally lucrative one for the entire oil industry. Chevron, the second-largest American oil company, is expected to post a quarterly profit of $4 billion on Friday.
Oil companies must contend with charges they are making too much money after a series of hurricanes curbed domestic production from the Gulf of Mexico and briefly pushed prices above $70 a barrel. For the first time in a generation, gasoline lines reappeared in America this summer, pushing fuel prices above $3 a gallon, a record even when adjusted for inflation.
Among those assailing the oil companies is Senator Byron L. Dorgan, a Democrat from North Dakota, who introduced legislation last month to impose a windfall tax on oil companies.
But Exxon bristled at suggestions that oil companies should be taxed more. For the full year, the company said it planned to invest about $18 billion in capital and exploration investments.
"If you're trying to encourage supply growth, it seems odd to put in disincentives," Henry Hubble, Exxon Mobil's vice president for investor relations, said in a conference call with Wall Street analysts and investors today. "You've got to let the market work."
In the third quarter, Exxon Mobil said it invested $4.4 billion on capital and exploration projects, up 22 percent from the comparable quarter last year. All told, the company said its capital investments totaled $12.4 billion for the first nine months of 2005.
But in another sign that oil companies are making more money than they can reinvest back into their business, Exxon Mobil said it returned $6.8 billion back to shareholders in the form of share buybacks and dividends.
In an interview on Fox News television 10 days ago, Mr. Raymond, Exxon Mobil's chief executive, sought to quell some of the criticism.
"The question of how much money we make - profit is not a dirty word. And it's absolutely required in our industry to have an adequate level of profit to be able to continue to invest."
Later in the program, when asked whether Exxon Mobil's profits were "obscene," he said: "No, I don't think they're obscene. I don't think they're obscene at all."
A spokesman said Mr. Raymond, who is due to retire at the end of the year after a dozen years at the head of the company, would not be available for comment today.
Shares of Exxon Mobil were trading up 7 cents, to $56.27, this afternoon on the New York Stock Exchange.
