- This topic has 0 replies, 1 voice, and was last updated 9 years, 9 months ago by
.
-
Posts
-
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.
- You must be logged in to reply to this topic.