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Exxon Mobil posts record U.S. $9.9B profit, is it time for government intervention?

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Exxon Mobil posts record U.S. $9.9B profit, is it time for government intervention?

Old 10-27-05, 12:11 PM
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Exxon Mobil posts record U.S. $9.9B profit, is it time for government intervention?

http://news.yahoo.com/s/nm/20051027/...exxon_earns_dc

By Deepa Babington
1 hour, 20 minutes ago

NEW YORK (Reuters) - Exxon Mobil Corp. on Thursday posted a quarterly profit of $9.9 billion, the largest in U.S. corporate history, as it raked in a bonanza from record oil and gas prices.

While profit was up 75 percent and revenue rose 32 percent to more than $100 billion, the results fell short of Wall Street forecasts due to production outages caused by Hurricanes Katrina and Rita and sharply lower profit at the company's chemicals division.

Analysts have warned that record profits for Big Oil, at a time when consumers are paying sky-high prices for gasoline, could add to calls for a windfall profits tax or other penalties on oil companies.

Third-quarter net income at Exxon, the world's largest publicly traded oil company, rose to $9.92 billion, or $1.58 a share, from $5.68 billion, or 88 cents a share, a year earlier.

Excluding a gain of $1.62 billion from restructuring its stake in a Dutch gas transportation business, earnings were $1.32 per share. On that basis, analysts' average forecast was $1.39, according to Reuters Estimates.

"They were a bit disappointing, but this a temporary phenomenon," said Paul Kuklinski, an analyst with Boston Energy Research/Soleil Securities. "This is largely attributable to hurricane effects."

Exxon shares rose slightly in early trade on the New York Stock Exchange.

Exxon's record earnings topped the $9 billion net profit reported on Thursday by Royal Dutch Shell Plc and were well above the best quarterly performances by Citigroup Inc., the world's largest bank -- $7.2 billion -- and conglomerate General Electric Co. -- $5.6 billion -- according to Reuters Fundamentals.

Oil and gas companies have been enjoying an unusually rosy environment for months. In the third quarter, they were helped by Katrina and Rita, which ripped through the Gulf of Mexico, disrupting energy operations in the region and sending oil prices and refining margins sharply higher.

In addition to calls for a windfall profits tax or other penalties, lawmakers and consumer advocates have been urging oil companies to expand refining capacity and take other steps to help bring down gasoline prices.

"We're already seeing some companies yielding to pressure," said Oppenheimer & Co. analyst Fadel Gheit. "But everybody is waiting for the big lady to sing, which is Exxon."

PRODUCTION FALLS

Exxon's oil and gas production fell 4.7 percent in the third quarter from a year earlier as outages caused by Katrina and Rita, maintenance activities, and maturing fields more than offset higher production from new fields in West Africa.

Excluding the impact of the hurricanes, divestments and entitlement effects, output fell 1 percent.

Still, record crude oil prices -- which touched $70 a barrel in the quarter -- pushed earnings at its exploration and production unit to $5.73 billion, up $1.8 billion from a year earlier.

At its refining and marketing operations, profit rose to $2.13 billion, up $727 million from a year earlier. Stronger refining margins outweighed weak marketing margins and lower petroleum product sales.

Earnings at its chemicals division tumbled to $472 million, down $537 million from a year earlier, due to higher feedstock costs and lower margins.

Exxon Mobil's capital expenditures jumped to $4.41 billion from $3.63 billion a year earlier.

Shares of Exxon Mobil, the largest of the so-called "super-major" oil companies, were up 70 cents to $56.90 in morning trade on the New York Stock Exchange. The shares rose more than 10 percent in the third quarter but underperformed the broader Standard & Poor's integrated oil and gas index, which rose more than 13 percent.


Since gasoline is something that most people and businesses cannot live without, we are at the mercy of the oil companies. Why should their profits reach staggering highs, just because the cost of a barrel of oil has gone up?

And you cannot tell me that gas stations that pay, let's say $2.50 gal for their gasoline, and charge $2.65 during week one, but then the cost of future gasoline goes up because a barrel of oil has gone up $10, then they have the right to jack up the price of that same gasoline to $2.85 during week two. That is not logical business sense.

What about a 2 liter bottle of Coke that you can get for $1.19 at a supermarket during week one. The bottling facility in the area blows up and is a total loss. Does the supermarket have the right to raise the price to $1.49, just because future bottles of Coke will be higher?

And what about after an earthquake or hurricane, does the local market have the right to jack up the price of a bottle of water from $.99 to $2.99?

Something is wrong here folks and changes need to be made, starting with the greedy oil companies.


Chris
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Old 10-27-05, 12:13 PM
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Been there, done that.

Should the government intervene when their profits go below average as well? People are free to buy shares in their stock and profit right along with the oil companies.
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Old 10-27-05, 12:16 PM
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People can't afford to buy shares. They're spending all their money on the company's gasoline.
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Old 10-27-05, 12:18 PM
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I'll be over here in the corner holding my breath waiting for Bush to take some action.



*thud*
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Old 10-27-05, 12:22 PM
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store buys gas for $2 a gallon, future prices rise to $3. they keep their gas at $2, they sell out quick. They buy another tank at $3. future prices fall. they keep their price at $3 while all the other stations lowered theirs with the market, now they can't sell any gas. who's going to buy the $3 gas?
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Old 10-27-05, 12:31 PM
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Originally Posted by Venusian
store buys gas for $2 a gallon, future prices rise to $3. they keep their gas at $2, they sell out quick. They buy another tank at $3. future prices fall. they keep their price at $3 while all the other stations lowered theirs with the market, now they can't sell any gas. who's going to buy the $3 gas?
Yeah, but how likely is that to happen?

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Old 10-27-05, 12:54 PM
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XOM's revenue was $100 billion giving them around 10% margins overall. In 2002 their magins were around 5% and 2004 they were 8% and change. Say they hit 10% for the entire year.

Intel had 21% margins in 2004. Maybe we should also regulate the price of computer chips since owning a computer is a requirement in this day and age?
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Old 10-27-05, 01:08 PM
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Originally Posted by al_bundy
XOM's revenue was $100 billion giving them around 10% margins overall. In 2002 their magins were around 5% and 2004 they were 8% and change. Say they hit 10% for the entire year.

Intel had 21% margins in 2004. Maybe we should also regulate the price of computer chips since owning a computer is a requirement in this day and age?
I think the world can live more without computers, compared to oil.

What do you think mostly powers computers? Electricity, powered by gasoline. Or if I'm wrong, do we get most of our energy from alternative energy sources? I really don't know, so I can't make a definitive statement.


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Old 10-27-05, 01:12 PM
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Is it time for government intervention?

Ask the people that voted for Bush. They voted for the oil man with his big oil board of directors. This turn of events is shocking, I tell you. Shocking!
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Old 10-27-05, 01:19 PM
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Originally Posted by mrpayroll
I think the world can live more without computers, compared to oil.

What do you think mostly powers computers? Electricity, powered by gasoline. Or if I'm wrong, do we get most of our energy from alternative energy sources? I really don't know, so I can't make a definitive statement.


Chris
Actually, we still get a significant portion of our electricity from coal. I'm pretty sure natural gas is second, and oil is third.

This is all just an interesting side conversation, though. Why don't you ask why oil prices are so high?

Weren't we blaming this on OPEC a couple of years ago? Now it's Western oil companies. Which scapegoat is next?

Last edited by TracerBullet; 10-27-05 at 01:22 PM.
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Old 10-27-05, 01:21 PM
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capitalism with some socialism?
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Old 10-27-05, 01:22 PM
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While my liberal tight ass "I don't want to pay for anything because I have it coming" side says they should, it is hard to argue with the fact that I can buy shares in the company if I choose. And most everyone can buy a more fuel efficient car if they choose as well. We just don't want to.
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Old 10-27-05, 01:24 PM
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Originally Posted by TracerBullet
Actually, we still get a significant portion of our electricity from coal. I'm pretty sure natural gas is second, and oil is third.

This is all just an interesting side conversation, though. Why don't you ask why oil prices are so high?

Weren't we blaming this on OPEC a couple of years ago? Now it's Western oil companies. Which scapegoat is next?
Over 1/2 of the electricity produced in this country is produced by coal.

I believe natural gas is about 15%.
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Old 10-27-05, 01:25 PM
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Originally Posted by kvrdave
While my liberal tight ass "I don't want to pay for anything because I have it coming" side says they should, it is hard to argue with the fact that I can buy shares in the company if I choose. And most everyone can buy a more fuel efficient car if they choose as well. We just don't want to.

That's crazy talk.
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Old 10-27-05, 01:28 PM
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I just heard 2 oil analysts who believe that oil production will increase steadily for the next 5 years; and that the trend for oil prices is downward.
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Old 10-27-05, 01:31 PM
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I own about 500 shares of Exxon and am very, very happy right now. So my answer is no.
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Old 10-27-05, 01:34 PM
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Originally Posted by classicman2
I just heard 2 oil analysts who believe that oil production will increase steadily for the next 5 years; and that the trend for oil prices is downward.
Steve Forbes and many other people have been saying that the current price run up is built on pure speculation and won't hold. Forbes expects $35 dollar oil in the next year.

So, on second thought, maybe I should sell that Exxon. Decisions decisions.
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Old 10-27-05, 01:43 PM
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Originally Posted by Hiro11
I own about 500 shares of Exxon and am very, very happy right now. So my answer is no.

Hello, my friend!

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Old 10-27-05, 02:01 PM
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Extinction Looms For Big Oil

The ironic thing about this whole discussion, is that the oil industry as we know it today MUST eventually become extinct.

There is only so much oil. The only arguments are how much there is and how long will it last.

Based on global population growth projections it's almost a virtual certainty that in a 100 years (perhaps much less) all known oil reserves and even those not yet found will likely be exhausted.

So unless these companies ramp up to provide energy from other sources (take your pick), they are going to be history sooner or later.

Of necessity the energy supply that your grandkids use in their future vehicles is going to be very different than today.
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Old 10-27-05, 02:03 PM
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Based on global population growth projections it's almost a virtual certainty that in a 100 years (perhaps much less) all known oil reserves and even those not yet found will likely be exhausted.
And they've been saying that a hundred years.
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Old 10-27-05, 02:06 PM
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Originally Posted by classicman2
And they've been saying that a hundred years.
Cmon, c-man. I was hoping for a good 'ol fashioned "Hogwash!"
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Old 10-27-05, 02:22 PM
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Originally Posted by 3Js
The ironic thing about this whole discussion, is that the oil industry as we know it today MUST eventually become extinct.

There is only so much oil. The only arguments are how much there is and how long will it last.

Based on global population growth projections it's almost a virtual certainty that in a 100 years (perhaps much less) all known oil reserves and even those not yet found will likely be exhausted.

So unless these companies ramp up to provide energy from other sources (take your pick), they are going to be history sooner or later.

Of necessity the energy supply that your grandkids use in their future vehicles is going to be very different than today.

where are you getting your info?

At $50 a barrell there are enough reserves in the US alone to give the US 400 years worth of oil reserves. 100 at the minimum.
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Old 10-27-05, 02:51 PM
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Originally Posted by 3Js
The ironic thing about this whole discussion, is that the oil industry as we know it today MUST eventually become extinct.

There is only so much oil. The only arguments are how much there is and how long will it last.

Based on global population growth projections it's almost a virtual certainty that in a 100 years (perhaps much less) all known oil reserves and even those not yet found will likely be exhausted.

So unless these companies ramp up to provide energy from other sources (take your pick), they are going to be history sooner or later.

Of necessity the energy supply that your grandkids use in their future vehicles is going to be very different than today.
NO, alternative fuels will be used when they become cheaper to use than oil, REGUARDLESS of how much oil is left on earth.
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Old 10-27-05, 03:35 PM
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Originally Posted by classicman2
And they've been saying that a hundred years.
I didn't realize oil was considered useful enough to be concerned with it running out 100 years ago.
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Old 10-27-05, 03:37 PM
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There is only so much silica to make motherboards, too. I worry about that.
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