‘Consumers Now Know Where Their Money Went’; Congress, White House Must Prevent a Repeat of Costly Energy Bubble
Santa Monica, CA — ExxonMobil’s $14.8 billion third-quarter profit reports clears up one thing–now consumers now know where their money went, said Consumer Watchdog. Exxon’s mind-boggling profit is again the highest quarterly profit ever reported by a private company, dwarfing even Shell’s record $8.45 billion, also reported today.
Exxon’s profit for the first three-quarters of the year, $37.4 billion, is nearly equal to its all-time record yearly profit in 2007 of $40.1 billion. The 2008 profits were reaped as the price of oil rose on unregulated speculation to over $145 a barrel.
"Consumers got credit card debt and empty wallets, while Exxon got double-digit billions," said Judy Dugan, research director of the nonprofit, nonpartisan Consumer Watchdog. “Citizens deserve to be mad. They should demand that government get back in the business of protecting them from corporate greed, or the pickpocketing will happen all over again in the next oil-price bubble.”
Exxon reaped its shocking profit even though its oil and natural gas production was down 8%, it refined less oil into fuel, and world oil prices began declining sharply halfway through the quarter. Energy prices during the last 9 months pushed consumers deeper into debt and magnified the harm of the financial crisis, said Consumer Watchdog. Yet government did nothing.
“ExxonMobil’s record profit at this point in time documents the growing conflict of interest between the oil industry and the economy of the U.S.,” said independent oil industry analyst Tim Hamilton. “The better it is for Big Oil, the worse it is for the rest of us.”
Exxon is again spending more on buying back its own stock (up to $35 billin this year) than on finding and drilling more oil ($25 billion). Its stock buyback for the third quarter was $8 billion. The company spends less than one-hundredth of a penny of every dollar of profit on renewable energy.
“ExxonMobil is wallowing in cash,” said Dugan. “It is so rich that it can live in the corporate lap of luxury no matter what its profits are for the foreseeable future. It is holding nearly $37 billion dollars in cash on hand, and about $125 billion in company-owned stock, giving new meaning to ‘piggy bank.’ It is Exxon doing only what is right for Exxon.”
Congress and the White House must plug tax loopholes and remove superfluous oil subsidies including so-called royalty relief, said Consumer Watchdog. Congress should certainly reject billions more in proposed taxpayer subsidies in the form of proposed new manufacturing tax credits.
The White House and Congress should:
– Plug the loophole that allows Exxon and friends to sell oil to their own overseas subsidiaries, driving up the price on paper before bringing the oil to the U.S. This allows the company to evade U.S. taxes.
– Oversee and regulate oil refining, to prevent production cutbacks that would keep the price of fuel artificially high.
– Oversee and regulate energy futures markets to quell speculative bubbles like the one this year that drove crude oil prices to over $145 a barrel and gasoline prices to a record $4.11 a gallon national average. Such regulation should require financial speculators to pay higher margins–put more money upfront on trades—and bar exotically constructed trades that encourage manipulation.
-Despite dropping energy prices, demand steady support for green energy, including transportation fuels and vehicles, energy conservation and wind and solar energy.
“Only having cleaner and cheaper alternatives will ultimately lift the stranglehold of oil on the U.S. economy,” said Dugan.
(For historical data on oil profits, see OilWatchdog’s “Oil Profits Monster” database, a free resource with detailed company-by-company profit figures since 2000, at www.OilWatchdog.org — The database includes mergers since 2000. Charts showing quarterly and annual profits can also be downloaded.)
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