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Exxon Mobil Profit Sets Record Again
Jad Mouawad, New York Times
By any measure, Exxon Mobil’s performance last year was a blowout.
The company reported Friday that it beat its own record for the highest profits ever recorded by any company, with net income rising 3 percent to $40.6 billion, thanks to surging oil prices. The company’s sales, more than $404 billion, exceeded the gross domestic product of 120 countries.
Exxon Mobil earned more than $1,287 of profit for every second of 2007.
The company also had its most profitable quarter ever. It said net income rose 14 percent, to $11.7 billion, or $2.13 a share, in the last three months of the year. The company handily beat analysts’ expectations of $1.95 a share, after missing targets in the last two quarters.
Like most oil companies, Exxon benefited from a near doubling of oil prices, as well as higher demand for gasoline last year. Crude oil prices rose from a low of around $50 a barrel in early 2007 to almost $100 by the end of the year – the biggest jump in oil prices in any one year.
…Given the darkening prospects for the American economy, which may be headed toward a recession, some analysts said oil company profits might soon reach a peak. Oil prices could fall this year if an economic slowdown reduces energy consumption in the United States, the world’s biggest oil consumer.
(1 February 2008)
How oily is your candidate?
Catherine Brahic, New Scientist
If I didn’t know better, I’d say “so much for the pulling power of oil money”. Reports suggested that it played a big role in George W Bush’s two terms in office, but according to this stunning online interactive graphic, it was powerless to save Rudolph Giuliani in the 2008 primaries.
OilChange International is hosting the graphic, which shows just how connected each of the US candidates are to the oil industry – monetarily, of course.
Not only does it look good, the detail is stunning. You can click on a company and see a table of how much it has given to whom, down to the nearest dollar (or click on the candidate’s mugshot to see how much they have received from all companies).
Click on a candidate in the table to see a list of donors, as named on their cheques. You can even click on the plus sign under “contribution” and get a scan of the receipt for the donation. Yes, that’s right – the receipt! That is what I call solid research.
Top of the oily candidates’ league table is Guiliani, who has received $550,608, mostly from Stewart & Stevenson, a company which builds equipment for the oil industry. Mitt Romney is second, having received $336,783 so far.
Hilary Clinton is third with $223,350; in fourth position is John McCain ($196,285) and Barack Obama comes sixth with $106,112 – although he has the dubious distinction of being Exxon’s top recipient ($15,150). Among the leading candicates, Mike Huckabee is last on the slick-list.
The browsing doesn’t stop there, however. At the top of the page are a few drop down menus which allow you to browse the elections of 2000 and 2004 too. Sensitive souls look away…
(1 February 2008)
Links and images at original.
BigOil big profits should not be taxed
Jerome a Paris, Daily Kos
As ExxonMobil announces record quarterly ($11.7 billion) and yearly ($40.6 billion) profits at the same time as net job destructions are announced for the US economy for the first time since 2003, the contrast in economic fortunes could not be starker.
With Shell (at $31.3 billion yearly profit, a European record) and other oil majors announcing massive profits, the clamor for windfall profits on oil companies will increase.
It might make political sense, but, quite frankly, it’s a terrible idea.
The main thing to remember is that Big Oil is our faithful servant. We want cheap, plentiful oil, and they are delivering – they are working for us, polluting the environment and interfering in other countries’ politics on our behalf, because we DEMAND IT.
Yes we do.
We need the oil. We crave the oil. We will not do without the oil.
There is a simple solution to Big Oil mega profits: tax the oil. Make the price of oil reflect how precious it is, how damaging it is to us and to others to get it out of the ground, and make people that use it pay for these costs instead of making others pay for it:
- Iraqi civilians killed in the current US occupation,
- African kids starving because food prices are increasing as cereals are used to make fuel,
- random traffic casualties,
- anonymous climate change victims around the world
If oil and gasoline were price in a more truthful way, maybe we’d stop wasting so much of it, maybe demand would go down and, with it, oil company profits.
The fact is, oil companies are a dying breed.
“Output fell for a fifth straight year” is what you can read about Shell, but it is true of all oil majors: their production has declined throughout the past 5 years, except for the temporary bump coming from the odd acquisition of a rival. This mostly reflects the growing control by oil producing countries over their own oil, but that can only encourage us to reduce our oil consumption given how politically unreliable most suppliers are thought to be.
But no, instead we’ll get calls for windfall taxes.
Don’t tax the windfalls, eliminate them. Tax the oil. And stop blaming the oil companies. We are the problem, notthem.
(1 February 2008)
The Oil Paradox
David G. Victor, Newsweek
… Although oil prices will eventually drop as new sources come online and biofuels and other alternatives take hold, crude price are likely to remain high and volatile for a while.
One reason is that today’s oil market is precariously balanced between supply and demand. That’s why small wiggles in expectations about how much oil the world economy will need, and how much supply is on hand, cause huge changes in price. Such gyrations explain why companies that are big oil users-such as airlines-owe their fortunes, increasingly, to how they manage their financial exposure to energy prices. Southwest Airlines, for example, is not just efficient in moving customers, but it is particularly notable for a string of good bets to hedge jet-fuel costs.
Oil is also not a normal commodity. A big part of today’s high prices-and why they are still nearly double the level of a year ago, despite dark economic news-is that oil beats to backward economics. When the price of soybeans or steel rises reliably, farmers and steel millers boost output, and prices abate. When the price of oil rises, many suppliers do the opposite. This bizarre response comes not from the Organization of Petroleum Exporting Countries (OPEC), which is always in the news, but from the pernicious ways that oil wealth ripples through the societies that have most of the oil.
The most visible and worrisome effect of oil riches is the “resource curse.” In poorly governed countries, oil wealth (and any other booty that is easily seized) actually impedes economic development because all politics is a struggle to loot the resource rather than to make long-term invests to improve human welfare.
…The rising spiral in oil prices will eventually abate. Some of the relief will eventually come from new supplies, but the big surprise may be in demand. When prices stay high, consumers eventually start investing in more efficient oil systems. And entrepreneurs also look for substitutes such as advanced biofuels that are just being tested on a commercial scale this year. If America’s economic troubles spread gloom across the globe, then demand will dampen further. And the trip down from today’s dizzying oil prices could be faster than most people think. Once investors in oil commodities are no longer confident that oil will always be more valuable tomorrow than it is today, they will switch their money to some other investment.
Victor is a law professor and director at Stanford’s Program on Energy and Sustainable Development, as well as an adjunct senior fellow at the Council on Foreign Relations.
(31 January 2008)
