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Surfergal
05-16-2005, 05:20 PM
Oil Majors' 1st-Quarter Earnings Shoot Up
Higher Crude Prices Leave Exxon Mobil, Others Awash in Cash

http://www.washingtonpost.com/wp-dyn/content/article/2005/04/28/AR2005042801906.html

By Justin Blum
Washington Post Staff Writer
Friday, April 29, 2005; Page E01

As consumers struggle with high gasoline prices, Exxon Mobil Corp. announced yesterday that its revenue totaled more than $82 billion in the first three months of the year.

The world's largest publicly traded oil company boosted its profit by 44 percent, to $7.86 billion, from the corresponding quarter a year ago. That left Exxon with a cash hoard of $30 billion.

Crude oil prices around $50 a barrel pushed up retail gasoline prices in the first quarter. They also helped Exxon Mobil raise its profit 44 percent.

Oil and Gas Prices
Stock prices, economic forecasts and consumer confidence show that ever-more-volatile oil prices have become a barometer by which consumers, investors, corporate executives and even voters gauge the future.

Other oil companies' profits are surging as well, leaving them with piles of cash. "There's an embarrassment of riches now that is unavoidable," said Lawrence J. Goldstein, president of the New York-based Petroleum Industry Research Foundation Inc.

Exxon Mobil pumped an average of about 2.54 million barrels of oil a day last quarter -- slightly more than the output of Kuwait. The Irving, Tex.-based company's sales for the quarter were more than the annual economic output of New Zealand.

Exxon Mobil and other major oil companies are benefiting from the same thing that has hurt consumers and is slowing economic growth: high crude oil prices. A barrel of oil averaged nearly $50 for the quarter, about 42 percent higher than during the same period last year.

Increasing demand in China, India and elsewhere has pushed the world's oil production close to its limits, leaving little cushion in the event of a terrorist attack or some other problem that affects production. Concern over those issues has caused traders to bid up the price of crude.

Among companies reporting quarterly profits in recent days, ConocoPhillips Inc. was up about 80 percent compared with the corresponding quarter last year, Royal Dutch Shell Group 28 percent, and BP PLC 35 percent.

The major oil companies are selling crude they pump from the ground at higher prices while their costs are not significantly increasing. At the gas pump, where gas prices remain above $2 a gallon, Exxon Mobil is reaping more profit than in previous years as margins have widened slightly, analysts said. But the company's officials are quick to note that their gasoline refining and marketing is far less profitable than their crude production.

The oil companies, which also produce natural gas, are benefiting from continued high natural gas prices, but analysts said those operations have not generated significantly more profit than they did last year.

Exxon Mobil's profit has increased significantly in its chemical production businesses -- a market segment that has become more lucrative as a result of worldwide economic growth bumping up demand.

It said it is returning some of its profit to shareholders by increasing dividends and accelerating a stock buyback program. The company has not dramatically accelerated spending in exploration and drilling, which analysts attributed in part to a lack of opportunities that would yield the kind of return that Exxon Mobil demands.

"The whole industry is cash-rich and opportunity-poor," said Fadel Gheit, an analyst with Oppenheimer & Co. in New York.

Surfergal
05-16-2005, 05:26 PM
page 2

Other major oil companies have also resisted significantly increasing their budgets for exploration and drilling, leaving some international energy officials concerned about whether there will be enough oil flowing from the ground years from now.

The earnings announcements come a week after the House approved energy legislation that would give billions in subsidies to oil and gas companies to encourage new production. The Senate plans to consider its version of the legislation next month.

Lawmakers who opposed the legislation said the profit reports are evidence that the subsidies are not needed. Rep. Edward J. Markey (D-Mass.) said oil companies are asking for subsidies at the same time they're "shaking money from out of [consumers'] pockets at the gas pump."

"I'm sure that they are chuckling at the continued support that they receive from the Republicans on these subsidies," Markey said.

But supporters of subsidies said that oil prices eventually will fall and the energy legislation is designed to encourage production even when that happens. "Profits aren't always up," said Rep. Joe Barton (R-Tex.), chairman of the Energy and Commerce Committee. "There are lots of times the oil market is different and the profits are down or nonexistent."

In 1980, after a rise in oil prices and company profits, Congress approved a windfall profits tax on oil companies. As prices and profits have risen during the past year, a similar tax has not been on the agenda. Markey said he was too busy fighting against oil industry subsidies to press for a tax on oil companies.

The industry says that among companies that have reported earnings this quarter, profit margins have averaged nearly 9 percent, which is just below the average across all U.S. companies that have reported results this quarter. Exxon Mobil had a profit margin of about 10 percent. It said its results were boosted by the sale of an interest in a Chinese oil company.

"There's no windfall profits," said John C. Felmy, the chief economist for the American Petroleum Institute, an industry group in Washington

schsa
05-17-2005, 06:57 AM
Giving money to petroleum companies is like buying food for the rich. They don't need it but they won't say no because that would be rude.

Surfergal
05-17-2005, 08:26 AM
So we are paying high gas prices to make them rich???? yes the need the subsidy...NOT!!

mesue
05-20-2005, 08:56 AM
I'm sorry I just don't think there is an oil shortage, if Bush's friends were all banana farmers there would be a shortage of that too and they would discover that we all need to eat one a day just to stay alive, at least thats what our news media would be telling us. These people are getting richer and richer off the backs of Americans and now because there is supposed to be an oil shortage he is going to let them drill anywheres they want to. Did you know we have plenty of oil in this country? Its just difficult to get out, before it was too expensive to get costing 30.00 a barrel, well now its not and on top of that we need to start investing in alternative energy but of course that would not help his friends.