Exxon hits back at gas price anger
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By Ben Rooney, staff Reporter april 28, 2011: 2:37 PM ET
NEW YORK (CNNMoney) -- In an attempt to deflect rising anger among American drivers and political leaders, Exxon Mobil
said Thursday that it makes relatively little money on gasoline, even as it reported a nearly $11 billion quarterly profit.
"We understand that it's simply too irresistible for many politicians in times of high oil prices and high earnings -- they feel
they have to demonize our industry," said a statement from Exxon vice president Ken Cohen.
The statement argued Exxon is not to blame for the recent surge in gas prices, now above $4 a gallon in many areas.
Exxon argued that most of its profit comes from overseas operations, and that earnings in its refining business, which
converts crude into gas, make up only 6% of its earnings.
(If most of the profit comes from overseas, why raise the pump prices in the U.S.? The U.S.price increase is causing un-due
hardship to the U.S... Barbara Mitchell)
The company said the recent surge in oil prices is due to strong global energy demand, and a stormy political climate in the
Middle East and the weak U.S. dollar.
In addition, Exxon said federal and state taxes make up 40 to 60 cents of the price for a gallon of gas, compared with the 7
cents per gallon that the company earns.
(I believe the 40 to 60 percent of federal and state tax referenced above is the same-taxes collected-at-the-pumps and from
end users in general. It is collected-from-each-individual-or-business-each- time-one-purchases-gas. Therefore the 40 to 60
percent of federal and state tax referenced above is not an additional gift to the government from Exxon's profits. I believe
that 40 to 60 percent taxes is acknowledged as a Business-expense. Of course I could be wrong, the rules of accounting
and the definition for speculation is different for the oil industry. Forgive -me, Barbara Mitchell)
Exxon also lashed out at the task force recently created by the Obama administration to crack down on speculation in the
oil and gas market.
In response to recent criticism of tax loopholes for the oil industry, Exxon said it has paid nearly $59 billion in U.S. Taxes
over the past five years, including $9.8 billion last year.
(Additionally if Exxon was going for sympathy, it would have helped if they would have included their gross cumulated
earning, and gross cumulative profits for the last five years. That along with the $59 billion that they collected from the
people and businesses, and later transferred to the State and Federal government would have given the full picture. To me
that validates that Exxon is going to collect enough additional money as profits from the people, no matter how much tax
they are required to pay. In other words, if the U.S. want to benefit from lower oil prices, then the Federal and State
government will have to lower the tax to 10 to 20 percent, because the oil companies are going to collect whatever amount
of profit they desire...... Now thats a perfect example of what happens when government buy- in-to "Too-Big-too-fail".
Because it takes millions of tax dollars, and decades to break up big corporation-monopolies, the break-up is not going to
happen. Maybe the only answer to save the U.S. Economy is a compromise. If the government and the oil industry can
agree on a price for gasoline pump prices, for example under $3.00 per gallon, for at least 5- 7 years. That would give the
U.S. Economy time to get off life support......
The oil industry made profits in the year-2000 when the pump prices for gasoline were $1.50 per gallon and less. Diesel
fuel was under $1.00 per gallon. According to a Chicago Sun Times" Quick Takes" article by Zay N. Smith dated May 15,
2001 " BP Amoco posted record annual profits of $14.2 billion, more than double the previous year's of $6.2 billion, and the
third largest corporate profit in world history"; The article states that: "BP's profit was the largest ever by a British
company,and follows a world record $17 billion made by global oil leader Exxon Mobil for the same period, and 13.1 billion
in earning from Europe an rival Royal Dutch/Shell Group"
In the compromise the oil companies would agree to a fixed price and the government would agree to a fixed tax reduction
for the same 5- 7 years. Barbara Mitchell )
Big Oil's $4 billion tax break in doubt
The retort came after Exxon Mobil, the world's largest publicly traded oil company, said it earned $10.7 billion in the first
three months of 2011, up from $6.3 billion in the same period last year.
Exxon chief executive Rex Tillerson said the performance reflects higher crude oil and natural gas "realizations," using
industry jargon for prices.
Tillerson also pointed to strength in Exxon's chemicals business and improved refining margins.
0:00 /4:51On board a Gulf oil platform
Oil prices averaged $95 a barrel in the first quarter, compared with $79 a barrel in the first quarter of last year.
But the rally in the oil market accelerated toward the end of the quarter, with prices powering above $100 a barrel in March.
In April, oil prices have averaged nearly $110 a barrel, up 20% from the start of the year.
The spike in gas prices has weighed on consumer spending, and put a damper on economic growth in the first quarter.
While oil prices remain below the record highs of nearly three years ago, the recent run has raised hopes among investors
that 2011 could be another banner year for Exxon.
In 2008, Exxon reaped the largest annual profit of any company in U.S. history, reporting a whopping $45 billion on the back
of high oil prices. Its largest quarterly profit, $14.8 billion, came in the third quarter of that year.
Other major oil companies have also benefited from the recent run-up, including Royal Dutch Shell (RDSA), which said
Thursday that profits rose 40% in the first quarter to $6.9 billion. Chevron (CVX, Fortune 500), the world's second-largest
publicly owned oil company, is scheduled to report results Friday.
Despite the strong results, shares of Exxon (XOM, Fortune 500) edged down 0.6% to $87.27 each. But the stock is up 20%
so far in 2011, making it the best performer in the Dow Jones industrial average after Caterpillar (CAT, Fortune 500).