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Breaking Own Record, Exxon Sets Highest U.S. Profit Ever
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Presumptive Democratic presidential candidate Sen. Barack Obama (Ill.) seized on the Exxon earnings announcement to fire a shot at his GOP rival, Sen. John McCain (R-Ariz.).
"Perhaps the only thing more outrageous than Exxon Mobil making record profits while Americans are paying record prices at the pump is the fact that Senator McCain has proposed giving them an additional $1.2 billion tax break," Obama said. "Instead of an energy policy that reads like an oil company wish list, it's time to create a new American energy economy by investing in alternative energy, creating millions of new jobs, increasing fuel-efficiency standards and ending the tyranny of oil once and for all."
The McCain camp called Obama's criticism a "hypocritical political attack" because he voted in 2005 for an energy bill backed by President Bush but opposed by McCain, the Associated Press said.
Despite the outrage in political circles, the financial world was disappointed with Exxon's mammoth earnings, which fell short of Wall Street analysts' expectations. Exxon's share price fell 4.7 percent, to $80.43 yesterday.
Some oil analysts fret that high prices will start to hurt big oil companies such as Exxon. "High prices are not good for its business," said Fadel Gheit, an oil analyst at Oppenheimer & Sons. He said they would fuel inflation for oil services, such as renting drilling rigs, and foster "government greed" that might lead to higher taxes and restricted access to resources.
Without a one-time write-off for the final settlement of charges related to the Alaska oil spill by the Exxon Valdez tanker, the company's profit would have been $11.97 billion.
Goldman Sachs analysts said they were disappointed with the company's falling oil and gas production. Exxon's output was lowered by the expropriation of its interests in Venezuela, a strike by Nigerian workers and contracts in places such as Angola, which cut Exxon's equity share in output once prices go beyond certain levels. Even without those factors, however, the company said its production of oil and gas would have dropped nearly 3 percent.
Exxon Mobil said its tax payments worldwide rose from 44 to 49 percent of its sales. But analysts said that was because of rising oil prices. Most oil-exporting countries have higher tax rates at higher prices. Russia collects about 90 percent of all revenue above $28 a barrel.
Nonetheless, after paying taxes and increased expenses, Exxon earned an average of $28.95 on every barrel it produced worldwide. In part because taxes are stiffer abroad, it earned $38.52 a barrel in the United States and $27.22 a barrel overseas.
