BIG OIL RAKES IN HISTORIC PROFITS

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BIG OIL RAKES IN HISTORIC PROFITS

 user 2005-10-28 at 9:36:00 am Views: 52
  • #14401

    Big Oil Rakes in Historic Profits
    Exxon Mobil Is First to Rack Up $100 Billion in a Quarter
    Oct.05 – While drivers have been paying up at the pump, profit has been gushing in to oil companies.
    Thursday,
    Exxon Mobil became the starkest example yet of how much big oil
    companies benefited from the huge run-up in oil prices in the third
    quarter even as two hurricanes ripped through the industry’s Gulf Coast
    infrastructure. Exxon reported:
    · Profit up 75% to $9.9 billion.
    That’s the second-most a U.S. company has earned in a three-month
    period, a USA TODAY analysis of data from Capital IQ found. It’s
    greater than the annual gross domestic product of entire nations,
    including Niger, Zambia and Iceland.
    · Revenue up 32% to $100.7
    billion. That’s greater than the annual GDP of all but just 57 of the
    world’s economies. It is also the most revenue – what is brought in
    selling goods and services – a U.S. corporation has posted in a quarter.
    Exxon
    illustrates the energy sector’s tremendous profit amid record-high
    energy prices. The industry is on pace to earn $96 billion this year -
    more than the USA’s industrial and telecom companies will earn
    combined, says Standard & Poor’s.
    Royal Dutch Shell reported net
    income of $9 billion Thursday. This week, BP reported a $6.5 billion
    third-quarter profit and ConocoPhillips, $3.8 billion. Today,
    ChevronTexaco is expected to post earnings of $3.9 billion, says
    Reuters Estimates.
    The windfalls were widely expected, given the
    soaring price of oil. A barrel of oil hit a record $70 in the third
    quarter and, even though it has backed off to $61.09 Thursday, it is
    still up 41% in 2005.
    The banner profits came despite damage from
    Hurricanes Katrina and Rita. Exxon said oil production fell 5% during
    the quarter and natural-gas production fell 9%. “Strong commodity
    prices offset any effect of the hurricane,” says analyst Lysle Brinker
    at John S. Herold.
    Oil companies benefited dramatically because the
    wholesale price of gasoline rose more rapidly than the price of oil
    because the hurricanes knocked out refining capacity, says Jason
    Putman, analyst at Victory Capital Management. The average price of oil
    was up 44% in the third quarter from a year ago, says Peter Beutel,
    president of Cameron Hanover, and the average wholesale price of
    refined gasoline rose 51% to $1.90.
    Consumers didn’t eat all the
    costs of higher oil prices, says Tina Vital, analyst at S&P. The
    average price of gas charged to consumers rose more slowly, 35% to
    $2.58, the Energy Information Administration says.
    But that doesn’t
    ease consumers’ pain. “These oil companies are making profit hand over
    fist as consumers are suffering,” says Anna Aurilio, legislative
    director at Public Interest Research Group.
    In a statement, Exxon
    CEO Lee Raymond defended his company. “We acted responsibly in pricing
    at our company-operated service stations, and we also encouraged our
    independent retailers and distributors to do the same,” he said.
    In
    a sign of the growing outcry, on Thursday U.S. Senate Majority Leader
    Bill Frist, R-Tenn., ordered hearings on why energy prices are so high
    and said oil executives would be asked to testify.