ExxonMobil draws more fire with 8.4 billion dollar profit

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Agence France Presse

NEW YORK, NY — US oil giant ExxonMobil on Thursday announced a first-quarter profit of 8.4 billion dollars, adding further fuel to the debate over soaring consumer energy costs.

The earnings were up seven percent from a year ago, but below the record in the prior quarter that ignited a political firestorm. Ironically, at 1.37 dollars per share, the profit was below the average Wall Street estimate of 1.46 dollars.

Revenue rose in the latest three months to 88.98 billion dollars from 82.05 billion in the same period a year earlier.

The world’s biggest oil and gas company had posted a profit of 10.7 billion dollars in the fourth quarter of 2005, bringing the full-year earnings to a record 36.1 billion dollars.

Still, the hefty profits drew scrutiny at a time when Congress is considering imposing a so-called windfall profits tax and studying the causes of record-high fuel costs.

“It is a travesty that oil companies should be making such staggering profits on the backs of Americans trying to fill their gas (petrol) tanks,” Senate Democratic leader Harry Reid said.

“Americans expect their government to do something to help, and it’s time for the Republican Congress to act. Democrats have offered real solutions to provide immediate relief, and I hope Bush Republicans will join us to ease the burden on the American people.”

“ExxonMobil’s report of a record 8.4 billion dollars in first-quarter profits demonstrates that skyrocketing gasoline prices are due to oil company profiteering, rather than the price of crude oil,” according to the Foundation for Taxpayer and Consumer Rights, a consumer advocacy group.

“The oil company’s continuously larger profits prove that prices at the pump have far outstripped the rise of crude oil prices and that public anger is entirely justified.”

The relatively slow growth in earnings from a year ago was attributed in part to higher tax payments. The company paid 7.06 billion dollars in taxes for the period, up 40 percent from a year ago.

Year-ago results included a gain of 460 million dollars from the sale of ExxonMobil’s interest in Sinopec.

The world’s biggest company in terms of revenues and market value said higher crude oil and natural gas realizations and improved marketing margins were partly offset by lower chemical margins in the latest quarter.

Exxon recently provoked even more ire after it awarded its outgoing chairman, Lee Raymond, a retirement package totaling nearly 400 million dollars.

With House and Senate elections coming up in November, politicians have responded to the rising tide of anger calling for increased scrutiny on the industry’s practices, while some have even proposed a windfall tax that would impose new levies on profits above a certain limit unless they’re reinvested in finding new energy supplies.

Facing bipartisan calls for action, President George W. Bush earlier this week announced he would stop putting oil into the Strategic Petroleum Reserve in an effort to lower crude prices that last week peaked above 75 dollars a barrel.

Shares of the company were down 1.1 percent to close at 62.42 dollars.

Kimberly DuBord at Briefing.com called the report “a big miss for Exxon.”

“Considering the recent run across the energy patch, look for a correction as several companies have missed what are certainly lofty expectations,” DuBord said, but suggested that the drop could be a buying opportunity.

“We recommend investors add on pullbacks given the continued tightness in the energy markets coupled with geopolitical uncertainties,” the analyst said.

On Wednesday ConocoPhillips reported first-quarter profit rose 13 percent from a year ago to 3.29 billion dollars with revenues surging on high oil prices.

Revenues jumped 23 percent from a year ago, pumped up by record high crude oil prices, to 37.9 billion dollars.

Consumer Watchdog
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