For oil companies, it is a political and public relations problem of the first magnitude.

There is war amid the oil fields of the Persian Gulf. Demonstrators carry picket signs saying "No Blood For Oil." Gasoline prices don't seem to be tumbling as quickly as the price of crude oil. And this week, most of the major petroleum companies will report sharp increases in profit in the just-ended fourth quarter.

Yesterday, Fairfax-based Mobil Corp. said its fourth-quarter earnings rose 46 percent from a year ago, to $651 million, on greatly improved profits from both its oil producing and refining and marketing operations. Another oil giant, Amoco Corp., already has announced a 69 percent rise in fourth-quarter profit, to $538 million, while Chevron Corp. has estimated that it earned $700 million in the quarter, compared with a loss a year ago.

Overall, industry analysts expect the profit increases among the major oil companies to average 70 percent for the fourth quarter. The seven biggest companies are expected to earn a total of $5.8 billion in the quarter, according to an estimate by First Boston Corp. -- a 145 percent increase from last year.

Oil industry executives, recalling the furious anti-Big Oil backlash that accompanied the oil shocks of the 1970s, are bracing for a repeat this time.

The industry's critics already are speaking out. "The fact is that the companies are profiting handily from this crisis," said Ed Rothschild, energy policy director at Citizens Action, a consumer advocacy group. "Consumers end up paying higher prices, airlines pay higher prices {for fuel} and the oil companies make more money as a result."

"These numbers that are beginning to come out are so extreme," said Sen. Joseph I. Lieberman (D-Conn.), a frequent critic of the industry who plans to introduce legislation that would skim "windfall" oil profits and prevent oil company profiteering. "To take that money out of our economy at a time of national security crisis is really outrageous. ... I'm not trying to put them out of business. I'm glad to have them make a profit, but not to have them exploit the rest of us while they're doing it."

Oil companies don't set crude oil prices themselves -- that's the domain of "Wall Street refiners," the traders and brokers who buy and sell oil cargoes and oil futures contracts on commodity markets. But the companies can greatly benefit from rising prices. High crude oil prices mean big profits for companies that sell crude, although most major oil companies buy more than they sell, somewhat reducing the effect of the high prices.

Not everyone in the oil industry had a great fourth quarter. Some smaller oil companies without large crude reserves of their own are expected to report poor results for the fourth quarter, victims themselves of the fast-rising raw material prices that squeezed profits in their refining and marketing operations. One major refiner, Ashland Oil Co., has said it expects to report a loss in its most recent quarter.

Industry officials argue that the big fourth-quarter profits were an anomaly. They point out that their earnings were flat or only slightly higher in the third quarter, in the early days of the Persian Gulf crisis, and they say that the current first quarter could be lackluster because of the recent slide in oil prices. On the whole, they argue, oil companies were no more profitable in 1990, as measured on a return-on-equity basis, than most other large industrial concerns.

"If legislators overreact to fourth-quarter profits that are anomalous and try to pass knee-jerk legislation, that is bad public policy," said Kenneth T. Derr, chairman of San Francisco-based Chevron. "It seems kind of ludicrous to have to sit here and apologize for making money. That's supposed to be the object of the exercise. But you ask me what I'm worried about? I'm worried about a dumb reaction."

The oil industry fears two possible responses to its profit announcements. One is the revival of federal or state controls on oil and gas prices and supplies, which many experts believe exacerbated the oil crises of the 1970s and which even critics such as Rothschild oppose. Federal oil price and supply regulations were allowed to lapse years ago, but at least 30 state governments still have the statutory ability to put some sort of controls on prices or supplies, and industry officials fear their use could create what some call a "self-inflicted" oil crisis at a time when supplies are plentiful.

The other fear is a renewal of the windfall profits tax, enacted during the 1970s when oil prices and profits skyrocketed. The tax was repealed in the mid-1980s when prices tumbled and the tax produced more red tape than revenue. As crude oil prices shot from $20 a barrel to as high as $41 this past fall, several members of Congress called for a new windfall tax, and Lieberman said a version he and Sen. Howard M. Metzenbaum (D-Ohio) proposed last session garnered 33 votes. "I hope that there's enough of a reaction -- I think that there ought to be -- to these profit reports in the fourth quarter to get the other 18 votes" needed for passage, Lieberman said yesterday.

Metzenbaum, however, said, "It's an uphill battle to pass such legislation" because of oil company lobbying efforts.

Others in Congress agree that such action would be unlikely. Unless high oil company profitability "goes on for an unusually long time, it's unlikely that there would be a response that would become law," said Rep. Philip R. Sharp (D-Ind.), chairman of the energy and power subcommittee of the House Energy and Commerce Committee. Noting that the Bush administration is likely to oppose any attempt to rein in the oil industry's finances, Sharp said, "My guess is that there will be a kind of a public relations battle here, but there will not be action."

Chevron, one of the companies that is trying to head off a windfall profits tax, recently provided a preview of its fourth-quarter results, estimating it would earn about $700 million in the fourth quarter and $2.2 billion for all of 1990. Chevron lobbyists have been working the Capitol in recent days in an effort to explain why the company made so much money and to attempt to blunt any legislative reprisals.

"We were well aware that this was going to cause some flak with some people in" Washington, Derr said. "My feeling is, let's go public and say what it is and why it is."

The oil companies argue that they should not be penalized for earning profits, especially those that are largely out of their control. Looking for, producing and refining oil is a highly capital-intensive industry, they argue, and the profit pays the bills for expansion. Mobil, for example, said it will need to spend $1 billion over the next five years to upgrade its refineries to comply with the new Clean Air Act, and Chevron already has announced an $800 million increase in capital spending for this year.

The industry says many of its critics are ill-informed. Chevron recently released a public opinion survey showing that 59 percent of Americans believe that U.S. oil companies own oil-producing properties in the Persian Gulf, when in fact, the industry lost virtually all of its Middle East interests to nationalization in the late 1970s and early 1980s.

Nonetheless, the survey reflected anew the nation's historic antipathy to Big Oil. Seventy percent of those interviewed said they had an "unfavorable" opinion of the oil industry, an opinion that has become more prevalent since Iraq's invasion of Kuwait on Aug. 2 sent gasoline prices soaring.

Industry analysts said there are likely to be continued shocks as oil companies make their results public over the next few days. But the analysts also said that if oil prices remain at their current relatively low levels -- and barring catastrophe from the Persian Gulf War -- oil company profits probably will be sharply reduced in the first quarter.

"Right now, I'd say the first quarter is looking fairly bleak for the industry," predicted Eugene Nowak, an oil industry analyst for Dean Witter Reynolds Inc. in New York.

"The fourth-quarter earnings could set a peak for years to come. If politicians start devoting their time to looking for windfall profits, it's going to be a short look, because those profits, in my opinion, are not going to be there."