BIG oil

By gedward on October 28, 2005 10:50 PM | Permalink | Comments (0)

$9.92 billion in quarterly profits on sales of $100 billion -- both records for a public U.S. company. Add in a competitor's $9.03 billion of its own during the same quarter and you have nearly $20 billion in profits between 2 companies in 3 months. Quite impressive, especially if you take into consideration that the entire budget for the state of California for FY 2004-05 was approximately $80 billion. (Source: California Department of Finance)

So, exactly who are these two companies?

Texas-based Exxon-Mobil and London-based Royal Dutch Shell.

Surprised? Chances are, probably not.

The Associated Press

With the recent figures, Exxon-Mobil alone has raked in profits of $25 billion in the first 9 months of 2005. Of course, these enormous profits come on the heels of previous record-setting profits by the company over the past 2 years:

2003
12-months profit
$21.51 billion

2004
12-months profit
$25.33 billion

2005
First 9-months profit
$25.42 billion

All this adds up to a staggering $72.26 billion in profits since Janurary 2003 (1st Quarter=$7.86 billion; 2nd Qtr.=$7.64 billion; 3rd Qtr.=$9.92 billion; Source: Exxon-Mobil)

So, exactly what is Exxon-Mobil's take on what many say amounts to grossly excessive profits?

Exxon Chairman and Chief Executive Lee R. Raymond did not make mention of the record results in the company's earnings release. Instead, he noted that the world's largest publicly traded oil company "acted responsibly in pricing at our company operated service stations, and we also encouraged our independent retailers and distributors to do the same."
The Associated Press

Ironically, the recent profits came during hurricanes Katrina and Rita, which Exxon-Mobil says cut production volume by 5% and will likely lower the company's profits by $100 million after taxes. Indeed, $100M is nothing to sneeze at -- unless of course, you just made nearly $10B. (In case you're wondering, $100M equals 1% of $10B, so the loss is quite insignificant.)

Oh, but lest we forget the social conscience of Exxon-Mobil, the company did actually contribute a meager $13 million to both Katrina and Rita hurricane relief funds:

Exxon Mobil Corporation announced today [Sept. 27, 2005] that it is committing $3 million in direct contributions to Hurricane Rita relief and recovery efforts... ...Including cash and in-kind contributions related to Hurricane Katrina, ExxonMobil has committed in excess of $13 million for relief efforts related to these two storms.
Exxon-Mobil

One can only wonder whether these generous profits by BIG oil partly explain the near total lack of technological innovation toward advance fuel systems on the part of America's oil and automotive industries. After all, with profits like these, you can easily afford NOT to innovate.

In the end, however, if there's any possible silver lining, it could be that soaring gas prices might just be the catalyst needed to begin curbing America's obsession with over-sized, gas-guzzling vehicles. Likewise, rising prices could also augment the recent trend of building more higher-density/mixed-used developments, thereby helping to reduce our increasing appetite for oil needed to feed all those gas-guzzling vehicles trolling around our ever-expanding suburbs...

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