how long are we going to stand for this?

Exxon Mobil profit, sales soar to records, Royal Dutch Shell not far behind
Eds: AMs. Also on financial services
By STEVE QUINN
Associated Press Writer
DALLAS (AP) ‹ Exxon Mobil Corp. rewrote the corporate record books Thursday
as the oil company¹s third-quarter earnings soared to almost $10 billion and
it became the first public company ever with quarterly sales topping $100
billion. Anglo-Dutch competitor Royal Dutch Shell PLC wasn¹t far behind,
posting a profit of $9 billion for the quarter.
Those results led Democrats in Congress to demand a new windfall profits
tax. ³Big oil behemoths are making out like bandits, while the average
American family is getting killed by high gas prices, and soon-to-be record
heating oil prices,² Sen. Chuck Schumer, D-N.Y., said in a statement.
But Energy Secretary Samuel Bodman said President Bush opposes such a move
and is instead considering a wide range of proposals to help cushion
consumers, including the creation of an emergency reserve of gasoline and
other refined products.
Thursday¹s outsized earnings are a result of surging oil and natural gas
prices that pushed pump prices to record territory after Hurricane Katrina.
They come on the heels of similar eye-popping gains reported this week by BP
PLC, ConocoPhillips Inc. and Marathon Oil Corp. Chevron Corp. reports its
earnings on Friday.
Some Republican members of Congress called on the industry to invest in ways
that will increase production so that consumers get a break at the pumps or
when they pay their heating bills. But analysts said telling the industry
how to spend its money was unfair, if not futile.
³Exxon is a good corporate citizen but it does not work for the welfare of
the country,² said oil analyst Fadel Gheit at Oppenheimer & Co. in New York.
Exxon Chairman and Chief Executive made no mention of the record results in
the company¹s earnings release. Instead, he noted that the world¹s largest
publicly traded oil company ³acted responsibly in pricing at our company
operated service stations, and we also encouraged our independent retailers
and distributors to do the same.²
Likewise, Henry Hubble, Exxon¹s vice president of investor relations, did
not specifically call attention on a conference call to the company¹s record
profit, which rose 75 percent in the quarter to $9.92 billion from $5.68
billion a year ago. Hubble said the company ³achieved a number of important
milestones.²
The previous oil-industry earnings record was Exxon¹s 2004 fourth-quarter
profit of $8.42 billion. Third-quarter revenue jumped to $100.72 billion
from $76.38 billion in the prior-year period.
To put its performance into perspective, Exxon¹s revenue for the three-month
period was greater than the annual gross domestic product of some of the
largest oil producing nations, including the United Arab Emirates and Kuwait
‹ even though it lost considerable production because of a string of
hurricanes that battered the U.S. Gulf coast.
Robert Kaufmann, a professor at Boston University¹s Center for Energy and
Environmental Studies, says production will return to pre-hurricane levels
and hurricane-related losses will disappear in future earnings reports, but
profits will remain high.
³A lot of the capacity was being built when oil was trading at $20 to $30 a
barrel range, so by definition those fields are much more profitable,² he
said. ³Nobody should be surprised by this.²
Despite the profit surge, Exxon¹s performance fell short of analysts¹
expectations and its shares fell 60 cents to $55.60 in trading Thursday on
the New York Stock Exchange, while U.S.-traded Class A shares of Shell rose
$1.15, or 1.9 percent, to $60.65 on the NYSE.
With oil futures above $60 a barrel for much of the third quarter, Exxon¹s
profits from petroleum exploration and production increased by $1.8 billion
to $5.7 billion. Soaring prices for gasoline, diesel and jet fuel lifted
refining and marketing profits by $727 million to $2.13 billion.
However, income at the company¹s chemicals unit declined by $537 million to
$472 million, a reflection of the higher prices for raw materials.
Exxon said hurricanes slashed U.S. production volumes by 5 percent from a
year ago, while global daily production slipped to 2.45 million barrels of
oil equivalent from 2.51 million barrels. By the end of the year, it will
cost the company about $100 million after taxes, the company estimated.
At Shell, third-quarter net income grew 68 percent to $9.03 billion from
$5.37 billion a year earlier. Revenue at the London-based company, which has
extensive operations in the United States, rose 8 percent to $76.44 billion.
³We are capturing the benefits of high oil and gas prices and refining
margins,² Shell Chief Financial Officer Peter Voser said, referring to the
profit margin on each barrel of crude that is refined into gasoline, diesel
and jet fuel.
Shells profits from exploration and production increased by $2.6 billion to
$5 billion in spite of an 11 percent decline in oil and natural-gas output.
Its refining and marketing profit climbed by $201 million to $1.7 billion.
Its chemicals business saw profits decline by $251 million to $321 million.
Shell said hurricane damage would cost it about $350 million, although much
of the expense would be covered by insurance.
Also on Thursday, Marathon said third-quarter profit more than tripled to
$770 million, up from $222 million a year earlier. Most of the profit came
from its oil and natural-gas production unit. However, the results fell
short of Wall Street¹s aggressive estimates and Marathon¹s stock slumped
$3.80, or 6.2 percent, to $57.28 on the NYSE.