ExxonMobil made history on Friday by reporting the highest quarterly
and annual profits ever for a U.S. company, boosted in large part by
soaring crude prices.

Exxon, the world’s largest publicly traded oil company, said
fourth-quarter net income rose 14% to $11.66 billion, or $2.13 per
share. The company earned $10.25 billion, or $1.76 per share, in the
year-ago period.

The profit topped Exxon’s previous quarterly record of $10.7
billion, set in the fourth quarter of 2005, which also was an all-time
high for a U.S. corporation.

"Exxon can put out some amazing numbers and this is one of
those cases," said Jason Gammel, senior analyst at Macquarie Securities
in New York.

Exxon also set an annual profit record by earning $40.61
billion last year – or nearly $1,300 per second in 2007. That exceeded
its previous record of $39.5 billion in 2006.

In the fourth quarter, the company said revenue rose 29.5% from a year ago to $116.64 billion.

Analysts were looking for the company to report quarterly profit
of $10.36 billion on revenue of $114.9 billion, according to earnings
tracker Thomson Financial.

Despite topping Wall Street’s estimates, Exxon shares slipped in afternoon trading.

The company reported strong results in its worldwide exploration
and production, or "upstream," business. Profit rose 32% to $8.2
billion during the quarter, offsetting some weakness earlier in the
year.

Income in Exxon’s refining, or "downstream," business rose 15.7% during the quarter to $2.27 billion.

Exxon attributed its impressive results to strong performance
across its divisions, but a large part of the profit surge was
underpinned by climbing oil prices.

Crude prices skyrocketed nearly 60% last year. The surge helped
prices break through the $100 a barrel mark for the first time ever
early last month. Since crossing that milestone, prices have eased to
around $90 a barrel.

Natural gas prices also jumped last year, albeit marginally.
But costs have also increased for the oil companies, which is why
profits haven’t risen as rapidly as crude prices.

Big oil companies that both pump oil and refine crude into
gasoline have to spend more for crude but are unable to pass on all the
extra cost to consumers, which eats in to gasoline profit margins.

The average price for a gallon of regular gasoline hit an
all-time high of $3.23 in May, according to the motorist organization
AAA. The high prices were blamed on strong demand and a series of
accidents that shut down refineries in the U.S. But slack demand for
gasoline in the latter half of last year kept gas prices from rising as
dramatically as crude prices.

Exxon’s record results, which coincide with smaller rival
Chevron’s profit jump, drew some fire from both government officials
and consumer rights groups, who have argued previously that the the oil
industry is deliberately restricting supply and profiting on the back
of U.S. motorists.

Sen. Charles Schumer, D-N.Y. took a swipe at the two firms,
calling on fellow lawmakers to break the country’s dependence on
foreign oil and rollback unnecessary tax incentives for oil companies.

Judy Dugan, research director of The Foundation for Taxpayer
and Consumer Rights, urged Congress to initiate some oversight into
unregulated energy trading markets, which have been accused of helping
to drive up the price of oil.

"Exxon is happy to take advantage of these prices," said Dugan.

But finding oil has also become more costly. The oil boom has
led to a surge in exploration and drilling activity, which has pushed
up the price for skilled workers and equipment.

Furthermore, new supplies of oil are increasingly difficult to
find and generally tend to be located in harder to reach — and hence
more expensive — places. The new natural gas field discovered this
week by Brazil’s Petrobras lies three miles under the ocean.

ExxonMobil representatives also stressed the cyclical nature of
the business and noted that growing global demand for energy will
require companies to heavily invest in future growth. The company said
it estimates that global demand will grow by 30 percent by 2030.

"The challenge for all of us in the industry is how to we meet
that increased demand," said Henry Hubble, vice president of investor
relations.

Exxon and Chevron aren’t the only two oil giants to report
impressive earnings recently. Conoco, the nation’s third-largest oil
company, trounced profit estimates by nearly 25% when it reported last
week. And Royal Dutch Shell PLC, Europe’s largest oil company, reported
a 60% increase in profits Thursday.
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CNNMoney.com staff writer Steve Hargreaves contributed to this report