http://www.signonsandiego.com/uniontrib/20060131/news_1n31exxon.html Exxon posts record $36 billion profit
Company downplays results in face of growing scrutiny By Simon Romero and Edmund L. Andrews NEW YORK TIMES NEWS SERVICE January 31, 2006 HOUSTON Exxon Mobil, aided by strong energy prices, said yesterday that it had $36 billion in annual income last year, a record for profits among U.S. companies. But while most companies would be proud to trumpet record profits, Exxon Mobil did everything it could to play down the news. Graphic: Exxon Mobil's annual net income For Exxon, which also handily widened its lead over Wal-Mart as the company with the most revenue in the nation, the report was an embarrassment of riches. Anxious about criticism of the results, executives began laying the groundwork months ago to try to prevent a political reaction against the company and the energy industry. For example, Exxon bought advertisements in leading newspapers arguing that profit margins in the industry lagged far behind those of other industries, like pharmaceuticals and banks. Still, growing oil profits are generating new scrutiny of the industry, with legislators and taxpayer groups expressing concern over Big Oil's good fortune, as soaring energy prices put increasing pressure on consumers. If it's Google, no one asks about the profits because they're too busy buying the stock, said Amy Myers Jaffe, associate director of the energy program at Rice University. Exxon is different. We have these emotional feelings related to gasoline because there's no readily available substitute. Exxon's results yesterday caused jaws to drop; by some measures, the company became richer than some of the pivotal oil-producing nations. Exxon reported a 27 percent surge in profits for the fourth quarter as elevated fuel prices gave rise to full-year profits in 2005 of $36.13 billion on revenue of $371 billion. Exxon said its overall profits climbed more than 40 percent last year, while its tax bill rose only 14 percent. It's outrageous for Big Oil to be making these kinds of profits, said Rep. Eliot Engel. Engel, D-N.Y., has sponsored legislation with a leading House Republican, Jack Kingston of Georgia, to provide new incentives for alternative fuels and energy conversion technologies. We don't need any more tax breaks for the industry, any more sops to the industry that's making record profits, Engel said. Advertisement Gasoline prices at the pump are rising again, with the average price of regular unleaded gasoline up nearly 7 percent from a month ago, to $2.34 a gallon, according to AAA, the automobile club. In one measure of Exxon's wealth and influence, its revenue of $371 billion surpassed the $245 billion gross domestic product of Indonesia, an OPEC member and the world's fourth most populous country, with 242 million people. The company's huge profit report came as no surprise to the White House or to lawmakers in either party, but it arrived just as Congress was preparing to resume a fight over imposing a one-time windfall profits tax on the major oil companies. Last fall, the Republican-controlled Senate passed a bill to extend about $60 billion in tax cuts over the next five years, but it included a provision that would impose a one-year tax increase of $5 billion on the nation's largest oil companies. The measure is unlikely to survive. President Bush has threatened to veto the tax bill if it includes the tax on oil companies, and House Republicans included no comparable measure in their own tax bill. Another measure approved in the Senate would effectively remove the foreign tax credit that the nation's three largest oil companies, Exxon, Chevron and ConocoPhillips, receive for taxes paid in other countries. Most energy analysts do not see the measures winning approval in the House, but Exxon executives remain concerned. We take these issues very seriously, said Mark Boudreaux, a company spokesman. We realized that we needed to do a better job of explaining how the industry works. To make its case, the company organized slide shows for groups of journalists ahead of the report, explaining that its operations accounted for only 3 percent of global oil production. Republican lawmakers were on the defensive yesterday. Not only are they under pressure from party leaders and from the White House to kill the proposed tax on oil companies, but they also inserted more than $2 billion of additional tax breaks for oil and gas companies in the energy bill that Congress passed in November. A spokesman for House Speaker Dennis Hastert, R-Ill., said the oil companies had to explain themselves better and offer more information on their plans to lower fuel prices by expanding their refining capacity in the United States. The message from the speaker is that oil companies need to do more work to bring oil and gas prices down, said Ron Bonjean, a spokesman for Hastert, who is to meet today with the president of the American Petroleum Institute. Companies make profits, and that's OK. But when you're dealing with a family's bottom line, we'd like to see some kind of plan to address rising costs. Executives at Exxon, which is based in Irving, Texas, have tried in recent weeks to reposition the public discussion of the company's profits by comparing results with those of other industries. For instance, said Boudreaux, the Exxon spokesman, pharmaceutical companies earned 18.6 cents for each dollar of sales in the third quarter of 2005, and banks 18 cents, compared with 8.2 cents at oil and natural gas companies. Still, the company's profits stand out by almost every measure. Exxon's profit last year of $36.1 billion easily surpassed the earlier mark of $25.3 billion, which Exxon had set in 2004, according to Howard Silverblatt, senior index analyst at Standard & Poor's in New York. Only Ford Motor Co.'s profit of $22 billion in 1998 comes close to Exxon's success in recent memory, Silverblatt said. Exxon's profits climbed last year thanks largely to higher prices for oil and natural gas, but also for other reasons, including higher margins at its refineries, the start of oil production at a project on Sakhalin Island in Russia's Far East, and a gain from the sale of a stake in Sinopec, an energy concern controlled by China's government. Exxon shares surged to $63.11, up $1.82, or 2.97 percent. However, even as investors applauded Exxon's new chief executive, Rex Tillerson, who succeeded Lee Raymond at the start of this year, Exxon's results masked potentially weaker profits if oil and gas prices begin to decline. Production on an oil-equivalent basis at Exxon's oil fields around the world declined 1 percent in 2005, excluding stoppages at platforms in the Gulf of Mexico from last year's hurricanes. This illustrates an industrywide problem: an inability to tap into the world's richest oil exploration areas in the Middle East and Venezuela because of political barriers. Lack of access to new reserves is the most important problem Exxon and the other large oil companies are facing, said Michael Economides, a professor of chemical engineering at the University of Houston. It should make them paranoid about the future. === Ingin belajar Islam sesuai Al Qur'an dan Hadits? 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