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Exxon Posts Record Profits

 

Exxon posts record $36 billion profit

Tuesday, January 31,2006

 

Profits also boosted by higher margins at company's refineries

 

Company downplays results in face of growing scrutiny

By Simon Romero, appeared in San Diego Union pg 1, Jan. 31, 2006

and Edmund L. Andrews, condensed by JK.

 

NEW YORK TIMES NEWS SERVICE

HOUSTON — Exxon Mobil, aided by strong energy prices, said yesterday that it had $36 bil­lion in annual income last year, a record for profits among U.S. companies. But while most companies would be proud to trumpet record profits, Exxon Mobil did everything it could to play down the news.  For Exxon, which also handily widened its lead over Wal-Mart as the company with the most revenue in the nation, the report was an embarrassment of riches. Anxious about criti­cism of the results, executives began laying the groundwork months ago to try to prevent a political reaction against the company and the energy industry.  For example, Exxon bought advertisements in leading newspapers arguing that profit mar­gins in the industry lagged far behind those of other industries, like Pharmaceuticals and banks.  [This is because they are selling a commodity for which their contribution and risk is significantly less.--jk]

 

Still, growing oil profits are generating new scrutiny of the industry, with legislators and taxpayer groups expressing concern over Big Oil's good for­tune, as soaring energy prices put increasing pressure on con­sumers. "If it's Google, no one asks about the profits because they're too busy buying the stock," said Amy Myers Jaffe, associate director of the energy program at Rice University. "Exxon is different. We have these emotional feelings relat­ed to gasoline because there's no readily available substitute." 

 

Exxon's results yesterday caused jaws to drop; by some measures, the company be­came richer than some of the pivotal oil-producing nations. Exxon reported a 27 percent surge in profits for the fourth quarter as elevated fuel prices gave rise to full-year profits in 2005 of $36.13 billion on reve­nue of $371 billion. Exxon said its overall profits climbed more than 40 percent last year, while its tax bill rose only 14 percent.

"It's outrageous for Big Oil to be making these kinds of prof­its," said Rep. Eliot Engel.

 

Gasoline prices at the pump are rising again, with the aver­age price of regular unleaded gasoline up nearly 7 percent from a month ago, to $2.34 a gallon, according to AAA, the automobile club.

 

Last fall, the Republican-con­trolled Senate passed a bill to extend about $60 billion in tax cuts over the next five years. The measure is unlikely to sur­vive. President Bush has threat­ened to veto the tax bill if it includes the tax on oil compa­nies, and House Republicans included no comparable mea­sure in their own tax bill.

Another measure approved in the Senate would effectively remove the foreign tax credit that the nation's three largest oil companies, Exxon, Chevron and ConocoPhillips, receive for taxes paid in other countries. Most energy analysts do not see the measures winning ap­proval in the House, but Exxon executives remain concerned.

"We take these issues very seriously," said Mark Boud-reaux, a company spokesman. "We realized that we needed to do a better job of explaining how the industry works."

To make its case, the compa­ny organized slide shows for groups of journalists ahead of the report, explaining that its operations accounted for only 3

percent of global oil production.

 

Republican lawmakers were on the defensive yesterday. Not only are they under pressure from party leaders and from the White House to kill the pro­posed tax on oil companies, but they also inserted more than $2 billion of additional tax break for oil and gas companies in the energy bill that Congress passed in November.

 

Boudreaux, the Exxon spokes­man, pharmaceutical compa­nies earned 18.6 cents for each dollar of sales in the third quar­ter of 2005, and banks 18 cents, compared with 8.2 cents at oil and natural gas companies.

Still, the company's profits stand out by almost every mea­sure. Exxon's profit last year of $36.1 billion easily surpassed the earlier mark of $25.3 billion, which Exxon had set in 2004, according to Howard Silverblatt, senior index analyst at Standard & Poor's in New York. Only Ford Motor Co.'s profit of $22 billion in 1998 comes close to Exxon's success in recent memory, Silverblatt said.  Exxon's profits climbed last year thanks largely to higher prices for oil and natural gas, but also for other reasons, in­cluding higher margins at its refineries, the start of oil pro­duction at a project on Sakhalin Island in Russia's Far East, and a gain from the sale of a stake in Sinopec, an energy concern controlled by China's govern­ment..

Sierra club has a short musical cartoon on how Exxon Corp. puts profits for environment at http://www.sierraclubplus.org/exxposeexxon/

 

But isn’t really the question of air we breath, but rather the total amount of harm done.  They are taking money from us that could go for medical care, for fix up the slums, for education.  They are siphoning away my vacation dollars and my lunch money.  And this is done with the blatant cooperation of the Republican party—the Democrats are not as blatant.