Warning: array_map(): Argument #2 should be an array in /opt/bitnami/apps/wordpress/htdocs/wp-content/themes/freshnews/functions.php on line 46

Warning: implode(): Invalid arguments passed in /opt/bitnami/apps/wordpress/htdocs/wp-content/themes/freshnews/functions.php on line 46
Exxon's $10.9 Billion 1st Qtr | Oil Watchdog

Exxon's $10.9 Billion 1st Qtr

Fri, May 2, 2008 at 12:13 pm

    Exxon's $10.9 Billion 1st Qtr

    Exxon’s $10.9 Billion in Profit Disappoints Street

    Prices at the Pump Aren’t Keeping Pace with Rising Oil

    Houston-based ExxonMobil, the No.1 publicly traded oil company in the
    world, rode record crude oil prices to $10.9 billion in first-quarter
    earnings Thursday, despite lower production of oil.

    ExxonMobil’s 17% increase in quarterly earnings from a year ago
    continues a string of eye-popping earnings announcements from big oil
    companies in the USA and the United Kingdom this week, including BP, up
    60%; Shell, 25%; and Conoco, 17%. Chevron announces its earnings today.

    "A rising tide lifted all ships," says Fadel Gheit, an oil industry
    analyst at Oppenheimer. "The gains from higher oil prices more than
    offset the lower production volume."

    Still, Exxon’s results fell short of Wall Street expectations, and its
    profit was $1 billion below the record it set in last year’s fourth
    quarter. Exxon’s net income rose to $2.03 a share, while analysts had
    expected $2.13 a share.

    Exxon’s share price fell 3.6% to close at $89.70 in trading Thursday on the New York Stock Exchange.

    As energy experts and scientists debate whether the world is running
    out of oil or not, Exxon says it’s spending more on exploration.

    In a statement, Exxon CEO Rex Tillerson said, "Spending on capital and
    exploration projects was $5.5 billion in the first quarter, up 30% from
    last year, as we continued to actively invest in projects to bring
    additional crude oil, natural gas and finished products to market."

    Analysts say Exxon’s lower numbers were caused by everything from the
    weak U.S. dollar, which means the rest of the world is paying much less
    per barrel of oil than U.S. oil companies are, to gas prices at the
    pump not rising as quickly as the cost of crude oil, which squeezes
    profit margins for U.S. refinery operations.

    "It’s not a pretty environment to be operating in," says Justin
    Perucki, an oil analyst at Morningstar, the investment research firm in
    Chicago. "The U.S. is feeling the brunt of the pain."

    While Exxon’s earnings may have disappointed Wall Street, record
    profits by oil companies and rising fuel prices have ignited a huge
    backlash from some politicians and consumer activists. They’re calling
    for a windfall profits tax and other measures to rein in what they
    believe to be excessive profits.

    Last year, ExxonMobil’s record $41 billion in earnings was the highest
    ever for a U.S. corporation. At the same time, oil prices this year
    have nearly doubled from 2007, at times rising well above $100. Drivers
    also are outraged over retail gas prices approaching $4 around the USA.

    Consumer Watchdog, a non-profit consumer advocacy group in Santa
    Monica, Calif., says record oil company profits are hurting the U.S.
    economy and consumers.

    "With gasoline prices topping $4 a gallon in some cities and averaging
    $3.60 nationwide, nobody is surprised to see the latest string of
    outrageous profits posted by Big Oil," John Simpson, consumer advocate
    at Consumer Watchdog, said in a statement. "People are driving less,
    but for every trip they cancel, rising prices at the pump more than
    wipe out their savings."

    The consumer group urged the federal government to stop buying
    market-priced oil for the U.S. Strategic Petroleum Reserve, which it
    contends worsens speculative trading on the crude oil futures market
    and drives up prices.

    "Purchases for the reserve at these record oil prices come straight
    from the pockets of taxpayers," says Judy Dugan, research director at
    Consumer Watchdog. "And by taking oil off the market, they fuel
    continued speculation."

    Rayola Dougher, senior economic adviser at API, the trade group for the
    U.S. oil and natural gas industry, says prices aren’t set by oil
    companies but by the marketplace of buyers and sellers. Global oil
    production in many regions is flat, while worldwide consumption rises
    1.3 million barrels of oil a day, Dougher says. Unless oil supplies
    increase and consumers buy less gas, prices could stay high. "The line
    between supply and demand has become very, very thin," Dougher says.

    Dougher concedes that while oil companies are making large profits,
    they’re also spending "10 times as much bringing these products to
    market and making those investments for the future."

    Even with record profits, the U.S. oil industry faces steep challenges, according to Gheit and Perucki.  Those include:

    – Strong competition from state-backed oil giants in Russia, China and India.

    – A long economic slump that could lead to higher prices for steel, energy and other refinery costs.

    – Gheit says high prices have forced the oil industry and governments
    to use new technology and search harder for new oil fields and other
    energy sources.

    – "Higher oil prices have unleashed a lot of resources that were not
    economic before," Gheit says. "That is a blessing in disguise."

    – High gas prices steer buyers from trucks.

    This post was written by:

    Fatal error: Uncaught Error: Call to undefined function userphoto_the_author_photo() in /opt/bitnami/apps/wordpress/htdocs/wp-content/themes/freshnews/single.php:49 Stack trace: #0 /opt/bitnami/apps/wordpress/htdocs/wp-includes/template-loader.php(74): include() #1 /opt/bitnami/apps/wordpress/htdocs/wp-blog-header.php(19): require_once('/opt/bitnami/ap...') #2 /opt/bitnami/apps/wordpress/htdocs/index.php(17): require('/opt/bitnami/ap...') #3 {main} thrown in /opt/bitnami/apps/wordpress/htdocs/wp-content/themes/freshnews/single.php on line 49