Exxon records nearly $10B profit

[Perchoutofwater]

Key phrase: "increased profit" ... not "decreased profit" ...

 

1102378[/snapback]

 

 

 

Net profit increased, but if you want to make accuasations of gouging you need to look at margins, I'd be willing to bet that margins didn't, and unless you can prove they have, then you and all your anti-capitalist friends just need to give it a rest.

[Beaumont]

Oil Doesn't Want Focus on Big Profit

Companies Stepping Up Advertising

 

By Frank Ahrens

Washington Post Staff Writer

Wednesday, October 26, 2005; Page D01

 

Gigantic oil companies generally do not enjoy the best PR.

 

Pick your poison: Oil companies have caused tanker spills, proposed drilling into the Arctic wildlife ranges, crafted ties to shady nations and meddled in the affairs of others, and produced products that pollute.

 

Now, even as high gasoline prices continue to anger motorists and aggravate financial problems at General Motors Corp. and Ford Motor Co., the oil companies have begun to report record quarterly profit. Yesterday, British energy giant BP PLC reported a $6.53 billion third-quarter profit, up from $4.87 billion in the same period last year. And tomorrow, analysts expect Exxon Mobil Corp. to show that it earned nearly $9 billion over the past three months -- the largest corporate quarterly profit ever.

 

Grumbling already has begun on Capitol Hill: Last month, one senator proposed a windfall-profit tax on oil conglomerates, and yesterday, House Republicans warned energy companies against price gouging.

 

To deflect the damage, the energy industry is relying on an ad campaign that was escalating even before hurricanes Katrina and Rita blitzed Gulf Coast petroleum refineries. The print and television ads are designed to educate consumers and lawmakers with a "we're all in this together" tone.

 

In the pages of The Washington Post, for example, according to the paper's ad executives, BP has taken out seven large issue ads so far this year, compared with zero through the same time last year. Exxon Mobil has had 19 so far this year, compared with 12 last year. For Chevron Corp., it's 17 ads so far this year, compared with six last year. And the industry's trade group, the American Petroleum Institute, has purchased seven ads in The Post so far this year, compared with none last year.

 

Chevron and Exxon Mobil increased their ad spending in the third quarter of this year at the New York Times, the newspaper company reported in its earnings call last week.

 

"You still have 100 hours of press time on any oil spill versus a tiny blurb or nothing at all if a company spends hundreds of millions on pollution control," said Lyle Brinker, an analyst for the John S. Herold Inc. energy research firm. "Sometimes, they just throw up their hands. The best thing they can do is keep the debate focused on educating the public."

 

Red Cavaney, president of the American Petroleum Institute, said the ads partially are designed to correct no-longer-true misperceptions about his industry. For instance, he said, even though 90 percent of the Gulf Coast drilling platforms and refineries were hit by either Katrina or Rita, there were no oil spills.

 

The industry's ads range from simple conservation messages to those that attempt to re-brand the oil companies as something else.

 

An American Petroleum Institute ad implores consumers to turn down thermostats, clean furnace filters, and weatherstrip windows and doors.

 

Full-page ads from Chevron ominously warn: "It took us 125 years to use the first trillion barrels of oil. We'll use the next trillion in 30."

 

The most conspicuously non-oil oil ads come from the former British Petroleum, which removed the oil from its name and became BP. Now, the company advertises itself as "Beyond Petroleum." The company's logo resembles a sun with leaves.

 

Stumble onto a BP television ad and it is easy to assume it is a commercial for a company that makes solar panels. Or that BP is an environmental organization of some sort.

 

"Solar is but a tiny, tiny, tiny part of their business," Brinker said. "They make 99.9 percent of their money in the oil business."

 

But oil companies may have nowhere to hide as their third-quarter earnings roll in this week.

 

"They should be record earnings," said Jacques Rousseau, an oil analyst at Friedman Billings Ramsey Group Inc. in Arlington.

 

In the third quarter of 2004, for instance, Exxon Mobil earned $6.2 billion. When the company reports its third-quarter results tomorrow, David Dropsey, an analyst with Thomson First Call research, expects profit of about $8.8 billion.

 

Chevron made $3.2 billion in last year's third quarter; Dropsey predicts the company will hit about $4.3 billion for this year's third quarter. ConocoPhillips Co. is expecting a $3.5 billion quarterly profit when it reports today, Dropsey said, up from $2 billion last year.

 

"Yes, our numbers are large, but when you figure the size of the companies, we are at an all-industry average," Cavaney said. "We are half the size of the returns of the financials and pharmaceuticals."

Yesterday, House Speaker J. Dennis Hastert (R-Ill.) called it "fine" that energy companies are reaping record profit. "However, there have been allegations of price gouging in the wake of the hurricanes. This is unacceptable, and any company who does it will be prosecuted," he said.

 

Cavaney said industry research showed that most consumers and lawmakers do not fully grasp how the energy industry works and why prices go up and down at the pumps. (He pointed out that average gas prices are back within 10 cents of their pre-Katrina level.)

 

This led his organization and many of the big oil companies to step up their hearts-and-minds media campaign. This is partially to help educate the consumers, but also to try to dissuade lawmakers from reinstituting a windfall-profit tax -- the last one stretched from 1980 to 1987 -- which oil companies fear. They say the tax drives up gasoline prices by reducing crude supply.

 

Last month, Sen. Byron L. Dorgan (D-N.D.) introduced a bill that would establish a windfall-profit tax on energy companies that would return some of the companies' earnings to consumers in the form of a rebate, exempting the percentage of profit the companies use for exploration.

 

Oil price hikes and corporate profit spikes are caused by supply and demand, Cavaney said. And the annual 5 to 10 percent decrease in the world's oil supply, combined with government resistance to allow drilling in places such as Alaska's wildlife refuge and the emergence of China as a major oil user has tipped the needle to the demand side of the equation, he said. The oil company ads seek to explain the complicated energy industry math to consumers, Cavaney said.

 

"We started back in the year 2000, trying to warn people that we were in a position that increases in demand were exceeding capacity," but no one listened, Cavaney said. "What we took too much for granted was that people understood our business."

[Perchoutofwater]

You are justifying Big Oil making a 10 billion dollar profit...

 

thats the point here right?

 

1102397[/snapback]

 

 

 

 

Their profits increased by 2.5 billion over the previous quater. What are we supposed to hope they lose money? Why be in business if you aren't going to try to make money? Why do you hate capitalism?

[alexgaddis]

You're supposed to say, Why do you hate America!

[dread]

Hmmm...how about the profits trial lawyers are making? Ask Mr. Kerry about the profits his running mate made while channeling the thoughts of fetuses?

[Perchoutofwater]

So all of the oil companies are in you article beau are reproting near record profits, I guess they are all in it together to screw us right? Your article does more to prove my point of view than what you and the others here are whining about. If there was legitmate gauging where they increased margins by a significant amount, I'd be right ther with you, but all this appears to be is a bunh of politcal hot air.

[Beaumont]

Their profits increased by 2.5 billion over the previous quater.  What are we supposed to hope they lose money?  Why be in business if you aren't going to try to make money?  Why do you hate capitalism?

 

1102421[/snapback]

 

 

 

 

The largest profit ever made in one quarter by any business in the history of the world ... $110 mil/day ... during a national emergency ... we certainly are all in this together.

[Perchoutofwater]

The largest profit ever made in one quarter by any business in the history of the world ... $110 mil/day ... during a national emergency ... we certainly are all in this together.

 

1102451[/snapback]

 

 

 

 

I say fair to them as long as they didn't hike up their margins significantly. See that is the diference between a capitalist and a socialist. I'm all for everyone making money, and don't envy those that do. Socialist don't wnat anyone making more than they do regardless of the risks and efforts they put in to it.

[Clubfoothead]

What caused the price of gas at the pump to increase in cost before the hurricane hit?

 

So far I've heard every excuse from the increased demand from everyone filling up becasue we all knew the price was going to go up, to China's oil use, to local station owners screwing people to refineries being off-line temporarily to damage to pipelines. Yet Exxon manages to just luck into a $10,000,000,000.00 profit while the world crumbles around it and I'm just supposed top believe they weren't complicit in any way yet they are the only ones in the whole scenario that had all 3 elements of means, motive and opportunity.

 

Really odd.

Edited October 27, 2005 by Clubfoothead

[Perchoutofwater]

What caused the price of gas at the pump to increase in cost before the hurricane hit?

 

1102481[/snapback]

 

 

 

The cost of oil futures going up once it was realized there was a possiblilty that our drilling platforms and refineries could be taken off-line.

[Clubfoothead]

The cost of oil futures going up once it was realized there was a possiblilty that our drilling platforms and refineries could be taken off-line.

 

1102488[/snapback]

 

 

 

 

So commodity brokers caused the price to go up?

[Beaumont]

I say fair to them as long as they didn't hike up their margins significantly.  See that is the diference between a capitalist and a socialist.  I'm all for everyone making money, and don't envy those that do.  Socialist don't wnat anyone making more than they do regardless of the risks and efforts they put in to it.

 

1102470[/snapback]

 

 

 

 

That's bull's butter ... I dont begrudge anyone making a profit. But if Exxon profit margins went up 20% (i.e., from 10 to 12%) during the third quarter compared to the second (I cant find that data yet) do you agree to pronounce them greedy, profiteering SOBs? Or will you claim that a 20% hike in margin during an emergency is not enough ...

[Perchoutofwater]

So commodity brokers caused the price to go up?

 

1102496[/snapback]

 

 

 

I think so, though I wouldn't swear to it. I'm sure it also has to do with demand. I know a lot of people were filling up the week before the hurricane hit because they were sure prices would go up. I know a lot of the local construction companies were topping of their fuel trucks and fuel tanks the week before it hit just so they could be sure to have fuel for the following week's work and also to try to get it for a cheaper price than they anticipated getting it in the following weeks.

[Perchoutofwater]

That's bull's butter ... I dont begrudge anyone making a profit.  But if Exxon profit margins went up 20% (i.e., from 10 to 12%) during the third quarter compared to the second (I cant find that data yet) do you agree to pronounce them greedy, profiteering SOBs?  Or will you claim that a 20% hike in margin during an emergency is not enough ...

 

1102504[/snapback]

 

 

 

I would probably agree with you, though if they are self insured, I might give them a little more than that to offset possible losses they knew would be comming. The fact that all of the oil companies profits increased leads me to believe this was a market reaction and not gouging. Exxon just happended to make the most, but then again they are the larges oil company in the world. Based on percentage, I actually think BP increased their net profits more than Exxon/Mobile.

[Clubfoothead]

The fact that all of the oil companies profits increased

 

1102530[/snapback]

 

 

 

 

Means, motive, opportunity.

[Perchoutofwater]

Means, motive, opportunity.

 

1102535[/snapback]

 

 

 

 

Yes, it is a vast conspiracy by all the oil companies. I think they were behind JFK's assasination too.

[Beaumont]

I would probably agree with you, though if they are self insured, I might give them a little more than that to offset possible losses they knew would be comming.  The fact that all of the oil companies profits increased leads me to believe this was a market reaction and not gouging.  Exxon just happended to make the most, but then again they are the larges oil company in the world.  Based on percentage, I actually think BP increased their net profits more than Exxon/Mobile.

 

1102530[/snapback]

 

 

 

 

Best I can do so far .... refining margins were up significantly:

 

“We are capturing the benefits of high oil and gas prices and refining margins,” Shell Chief Financial Officer Peter Voser said, referring to the profit margin on each barrel of crude that is refined into gasoline, diesel and jet fuel.

 

Exxon Profit Rises to $9.92 Bln, Oil Industry Record (Update2) ListenListen

 

Oct. 27 (Bloomberg) -- Exxon Mobil Corp., the world's largest publicly traded oil company, said third-quarter profit jumped 75 percent to an oil industry record of $9.92 billion as energy prices surged to all-time highs.

 

Net income rose to $1.58 a share, compared with $5.68 billion, or 88 cents a share, a year earlier, Irving, Texas-based Exxon Mobil said today in a statement. Revenue climbed 32 percent, topping $100 billion for the first time.

 

Prices for oil, natural gas and gasoline climbed to records in the quarter, spurred by demand growth around the world and hurricanes that crimped U.S. supplies. Profit margins on refined fuels widened as gasoline and diesel prices rose even more than the cost of crude oil.

[Perchoutofwater]

Best I can do so far .... refining margins were up significantly:

 

“We are capturing the benefits of high oil and gas prices and refining margins,” Shell Chief Financial Officer Peter Voser said, referring to the profit margin on each barrel of crude that is refined into gasoline, diesel and jet fuel.

 

Exxon Profit Rises to $9.92 Bln, Oil Industry Record (Update2)   ListenListen

 

Oct. 27 (Bloomberg) -- Exxon Mobil Corp., the world's largest publicly traded oil company, said third-quarter profit jumped 75 percent to an oil industry record of $9.92 billion as energy prices surged to all-time highs.

 

Net income rose to $1.58 a share, compared with $5.68 billion, or 88 cents a share, a year earlier, Irving, Texas-based Exxon Mobil said today in a statement. Revenue climbed 32 percent, topping $100 billion for the first time.

 

Prices for oil, natural gas and gasoline climbed to records in the quarter, spurred by demand growth around the world and hurricanes that crimped U.S. supplies. Profit margins on refined fuels widened as gasoline and diesel prices rose even more than the cost of crude oil.

1102567[/snapback]

 

It doesn't suprise me that refining margins are up as the refineries that were not affected would be operating at max capacity to make up the difference. However, the cost to trasport both the crude and refined fuel must have also increased with increased cost of the fuel itself, so that doesn't neceisarrily translate into increased overall margin, and again some increased margin could and should be acceptable, if they are self insured to offset future losses from drilling platforms and refineries. What the overall margin increase was, and whether or not they are self insured.

Edited October 27, 2005 by Perchoutofwater

[aqualung]

This is a little off topic.

 

But some of you bitch and complain about unions making money for their members but see nothing wrong with this.

 

Absolutely amazing.

Edited October 27, 2005 by aqualung

[Perchoutofwater]

This is a little off topic.

 

But some of you bitch and complain about unions making money for their members but see nothing wrong with this.

 

Absolutely amazing.

1102627[/snapback]

 

If the government would stay out of the strikes, and let the corporations hire who they want to then I wouldn't have a problem with it. I'm all for Captialism, which doesnt' artificially inflate or deflate the cost of anything. Union strikes that the goverment gets involved with normally artificially inflate the cost of labor. That is my only problem with the Unions. Of course if the government didn't step in, the unions would have disolved long ago, as they are inefficient, and artificially inflated.

[Shotgun Messiahs]

I can see the Exxon station at Central and Walnut Hill from my office.

 

I'm naive.

 

1101415[/snapback]

 

 

 

 

Funny, my brother works at 75 and Royal.

I work over by 635 and 35 myself. Small World.

[Ursa Majoris]

That is my only problem with the Unions. 

 

1102644[/snapback]

 

 

 

[Randall]

Sorry, I thought gas was a commodity, and suseptable to market forces.

 

1101465[/snapback]

 

 

 

 

 

Free markets, you can't be THAT dumb.

 

Translation-I'm making money, screw everyone else.

[Dr. Love]

If oil companies can raise prices with impunity, as many here have implied and several explicitly said, then why don't they do it all of the time? What is preventing them from raising it to $3.50/gal tomorrow that wasn't preventing them from doing that several weeks ago? What exactly was the opportunity that the hurricanes presented to allow for the raising of prices that isn't available the rest of the time? It's not like any company (save for regulated utilities) has to justify their price; they merely put it to the market and judge the reaction.

 

The reality is that the market was willing to bear a higher price. Nobody who puts gas in their vehicles likes it, but that doesn't make it any more wrong than other industries who charge a premium for their products. Hell, do cell phones really need to cost $40+/month? Is cable TV making too much money when they charge $45/mo for their service? Well, for myself I can say yes, which is why I have neither, but that doesn't make it wrong for them to charge what the market will bear.

 

Companies charge what consumers are willing to pay, not what they want to pay. The fact that Exxon makes 500 gazillion dollars doesn't automatically mean they're doing anything wrong.

[Dr. Love]

By the way, this has to be one of the better threads in the post-DMD-Katrina smackdown Tailgate.