Monster profits for Exxon Mobil
DALLAS – While drivers have been painfully paying up at the pump, oil companies have been racking up eye-popping profits.
Exxon Mobil on Thursday reported the highest quarterly revenue of any U.S. company ever, thanks to record-high oil and natural gas prices in the wake of hurricanes Katrina and Rita.
The big jump in earnings for Exxon Mobil, as well as other major oil companies, prompted a backlash from some politicians, concerned that high energy costs are hurting voters.
“At the same time that oil companies are posting record profits, Americans are paying more than ever to fill up their cars and heat their homes,” said Senate Majority Leader Bill Frist, R-Tenn.
Frist called for Senate committee hearings, where lawmakers can ask oil executives why oil and natural gas prices are so high.
The political concern seemed to set the tone for Exxon Mobil’s presentations Thursday, as the company pointed out that, after the hurricanes, Exxon Mobil quickly boosted refining capacity to make much-needed gasoline. Exxon Mobil also highlighted its investment in new projects to bring more fuel to market.
The Irving, Texas-based company said third-quarter revenue rose 32 percent to $100.7 billion. Earnings rose 75 percent to $9.92 billion, or $1.58 a share, including a gain on the transfer of a stake in a Dutch gas company.
Excluding the gain, the world’s largest company earned $8.3 billion, or $1.32 a share.
“Our earnings in the third quarter reflect the impact of the relatively volatile industry environment on commodity prices and industry margins,” Exxon Mobil said in a statement.
Crude oil futures were up 0.6 percent at $61.05 on Thursday. Natural gas was down 1.5 percent at $13.83.
Oil and natural gas prices hit all-time highs during the third quarter after hurricanes halted Gulf Coast production and wrecked some facilities. The storms shut down some refineries, boosting gasoline prices as well.
“Following the hurricanes, Exxon Mobil maximized gasoline production from all of our refineries which were operating in the U.S., and increased imports from overseas affiliates to meet U.S. demand,” the company said in a statement.
Hurricane damage cost Exxon Mobil $45 million in the third quarter, and will cost more in the fourth quarter, though the company expects fourth-quarter costs won’t go above $100 million.
The hurricanes also caused Exxon Mobil oil production to drop 4.7 percent and gas production to fall 9 percent during the quarter.
Exxon Mobil said it invested $4.4 billion during the third quarter on capital and exploration projects. And the company’s vice president of investor relations, Henry Hubble, said the company has been steadily increasing its refining capacity, allowing it to bring more gasoline to market.
“We’ve grown our capacity 2 percent per year, well above the demand rate, which has been about 1.5 percent. And when you apply it across the kind of capacity that we have, that ends up delivering us the equivalent of a new refinery every three years,” Hubble said during a conference call Thursday.
Some lawmakers, concerned that high energy costs will hurt consumers, have made a number of suggestions, from levying more taxes on oil companies to compelling the companies to invest in projects to bring more fuel to market.
Frist on Thursday asked the Senate Energy and Natural Resources Committee and the Senate Commerce, Science and Transportation Committee to hold a joint hearing on energy prices, and to invite oil executives and state attorneys general. He also called for an inquiry into whether any price gouging has occurred.
Exxon Mobil’s Hubble said the issue is a “tightness of supply vs. demand,” and the best way for lawmakers to stimulate supply is to step back and let the markets work.
“If you’re trying to encourage supply growth, it seems odd to put in place disincentives,” he said.
Sean Sexton, an oil and gas analyst with Fitch Ratings, said big oil companies are scouting for ways to invest the billions in cash they’ve generated. But exploration and production in the United States is limited by environmental concerns.