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
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
"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
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..