$100.7 billion in revenue is a record as profit hits $9.9 billion. Results draw outrage.
Los Angeles Times
More than a billion dollars a day, $45 million an hour, almost $340 for every living American — that’s what Exxon Mobil Corp. reported in third-quarter revenue Thursday.
The Irving, Texas, oil giant said sales totaled $100.7 billion — the most by any company in history — and reported a profit of $9.9 billion, an oil industry record.
The financial results drew outrage from politicians and consumer advocates who see historically high U.S. gasoline prices as evidence of profiteering.
Others, however, said Exxon was simply following the laws of free enterprise and reaping a bounty for high-risk investments in exploration in often politically unstable regions of the world.
“This is a staggering profit and proof that we are being gouged by the oil industry,” said Jamie Court of the Foundation for Taxpayer and Consumer Rights in Santa Monica.
Court said oil companies had refrained from building domestic refineries so that tight supplies would push up prices.
“Now Exxon needs to invest that money in making more gasoline,” he said. “Neither Exxon nor the industry has opened a new refinery since 1976 because the companies know keeping refined supply low is a recipe for huge profits.”
Certainly, political pressure is building on the industry to increase its
refining capacity, even from a GOP that this year championed an energy bill that
included new subsidies for the oil and gas industry.
“These companies are turning in record profits — they have a responsibility to expand,” Energy Secretary Samuel Bodman said Thursday before the Senate Energy Committee. Senate Majority Leader Bill Frist (R-Tenn.) called for an investigation of possible profiteering.
Exxon‘s profit for the three months ended Sept. 30 topped the $9 billion reported earlier Thursday by another oil giant, Royal Dutch/Shell Group. But Exxon‘s earnings fell short of some past profits posted by companies that benefited from one-time gains, notably MediaOne Group’s $26.6-billion profit in the second quarter of 1998 and Ford Motor Co.’s $17.6-billion profit in the first quarter that year.
In a statement, Exxon Chairman Lee Raymond said his company had done its best to restore capacity after hurricanes Katrina and Rita.
“We acted responsibly in pricing at our company-operated service stations, and we also encouraged our independent retailers and distributors to do the same,” Raymond said.
Although the numbers are big, the criticism enveloping the oil companies as they announce their financial results this week is largely unfair, said Fadel Gheit, an industry analyst at Oppenheimer & Co. in New York.
He said that Exxon had at least $100 billion of capital at risk in its business and that although the industry looked flush, that was not always the case.
“In the late 1990s, when oil was just $12 a barrel, a lot of these companies were losing money and could have gone bankrupt,” he said. “Every time they drill a hole in the ground they spend tens to hundreds of millions of dollars, and there is no guarantee there will be a return.”
All told, Exxon said, its profit last quarter was 75% above the $5.68 billion it recorded a year earlier; third-quarter income included a special gain of $1.6 billion from the restructuring of Exxon‘s interest in a Dutch gas transportation venture.
The $100.7 billion in revenue represented a 32% gain from a year earlier and eclipsed the previous record of $88.6 billion it recorded in this year’s second quarter.
Exxon shares fell 60 cents to $55.60.
Here’s what you could buy with Exxon Mobil’s $9.9-billion profit:
* 3,300,000,000 MTA day passes
* 77,100 Hummer H1 Alphas
* 3,548,387,000 gallons of regular, self-serve gasoline
* 33,001,100 Apple video iPods
* 20,040 median-price homes in Los Angeles County
Sources: GM, AAA, Amazon.com, DataQuick, Times research. Graphics reporting
by Scott Wilson.