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Exxon's $10B fill-up: Cashing in on crunch
Boston Herald ^
| Brett Arends
Posted on 09/15/2005 9:21:26 AM PDT by Sir Gawain
Exxon's $10B fill-up: Cashing in on crunch By Brett Arends Wednesday, September 7, 2005 - Updated: 04:27 PM EST
Oil companies came under new fire yesterday when it emerged that ExxonMobil's profits are likely to soar above $10 billion this quarter on the back of the fuel crisis.
That's $110 million a day, and more net income than any company has ever made in a quarter. It's also a stunning 69 percent increase over the same period a year ago and a 34 percent jump from the $7.6 billion Exxon made just last quarter.
``Do you realize President Bush has just given a tax break to ExxonMobil?'' thundered Rep. Ed Markey (D-Malden). ``Of all the companies in the history of the world that needed a tax break, this month, ExxonMobil should be at the bottom of the list.''
The law gives incentives to producers such as Exxon to expand production, such as for drilling for new wells in deeper waters in the Gulf of Mexico.
``It makes me angry,'' agreed Rep. Marty Meehan (D- Lowell), noting rising fuel prices ``are going to have a negative ripple effect throughout the economy.''
Meehan yesterday sponsored legislation on Capitol Hill to penalize price ``gouging,'' assuming it can be agreed what that is. Markey is preparing for Energy Committee hearings on the fuel crisis.
Even oil company shareholders were critical. Hub fund manager Lee Forker, the head of New England Research & Management, said the profits reflected a failure of oil companies' leadership to invest in future production. ``They're maximizing present cashflows and ignoring the future,'' he said.
ExxonMobil is spending about $5 billion a quarter buying back its own shares.
Forker says the oil companies bear responsibility for recent shortages, because they have held back on investment in new production for years due to a fear of a price collapse. ``It could just be a big scam `Let's just restrict the supply along with the OPEC countries and we'll all get rich together' '' he said.
Crude oil prices fell yesterday by $1.61 to $65.85 a barrel. Gasoline prices also eased slightly from late last week's panic.
But Lehman Brothers yesterday became the first Wall Street investment bank to issue a new profits forecast for Exxon following the week of post-Katrina turmoil, when gasoline prices surged as high as $3.59 a gallon in the Bay State and crude oil prices briefly topped $70.
The new forecast: $1.62 a share, or $10.2 billion in total. Other analysts are likely to follow suit.
Jacques Rousseau, energy analyst at investment bank FBR, yesterday explained that most of the extra money that consumers are paying for gasoline is going straight through to the big companies' bottom line.
The reason? Prices are soaring because of perceived shortages while the cost of producing the gasoline is little changed. |
TOPICS: Business/Economy
KEYWORDS: exxon; gasprices; oil
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To: RinaseaofDs
Don't know about that. They did little or nothing to lower prices (prices we were CHOKING over! I miss those days) prior to Nov. 4.
21
posted on
09/15/2005 9:44:37 AM PDT
by
txhurl
To: Paradox; All
Wasn't the liberals who advocated high gas prices in the first place??
22
posted on
09/15/2005 9:44:42 AM PDT
by
KevinDavis
(the space/future belongs to the eagles --> http://www.cafepress.com/kevinspace1)
Comment #23 Removed by Moderator
To: Pessimist
24
posted on
09/15/2005 9:48:05 AM PDT
by
oblomov
To: EagleUSA
I guess when we were losing our asses in 2000 (about 20% of the companies went under) and from 1986 to 1998 (about another 40%) we were profiteering then too. I didn't hear too many screams that we needed to give incentives to drill when the price was $9.59 per barrel in 1999 and 2000, when we increased our dependence on foreign oil by another 10%. Oh well, I guess it must just be me. Look at who they quote--New England Research and Management. I'm sure they are experts--in fact I'm sure that that person thinks you find oil by looking under your car.
25
posted on
09/15/2005 9:48:40 AM PDT
by
richardtavor
(Pray for the peace of Jerusalem in the name of the G-d of Jacob)
To: EagleUSA
Gee how can you have profits when you have to repair old equipment when you can't build new facilities, have to repair rigs that were damaged rebuild port facilities.
And buy product you can't produce when your facilities are damaged?
Looks like to me they actually might be losing money
26
posted on
09/15/2005 9:49:05 AM PDT
by
dts32041
(Shinkichi: Massuer, did you see that? Zatôichi: I don't see much)
To: starboardlist
The 250 mpg hybrid is a plug-in hybrid.
27
posted on
09/15/2005 9:50:53 AM PDT
by
oblomov
To: Sir Gawain
I'm skeptical of the need for tax incentives right now. $60-$70/bbl oil should be enough incentive for exploration.
To: oblomov
That is incredibly misleading. The person in the article jammed his hybrid full of extra batteries to power the electric motor, then charges those batteries by plugging it in to an electrical source, which most likely gets its power from burning gas, oil, or coal.
To: KevinDavis
As a shareholder of Exxon, I thank its outstanding management team and regret only that I did not purchase more shares back in 1995 when I first became a shareholder. My stake has more than quadrupled since that time.
I think I'll visit Exxon tonight and fill up my wife's SUV.
30
posted on
09/15/2005 9:53:55 AM PDT
by
Looper
To: RinaseaofDs
>>this is not defensible
OK, here's the solution: invent alternative energy technology that is cheaper than gasoline. Then everyone will buy it instead of gasoline, you will get rich, and Exxon will be put out of business.
31
posted on
09/15/2005 9:53:56 AM PDT
by
oblomov
To: KevinDavis
So what? They are just asking for the government to do something. Unfortunately, it appears that oil companies have colluded to not build new refineries. Environmentalist whackos don't get all the blame.
Our country is on the verge of an inflation explosion. Because of fuel prices, huge numbers of people can no longer afford to drive their cars to work.
I certainly believe in profits, but this is terrible PR. It opens the door for Hillary and the Democrats to demand more regulation and even price caps. If people can't drive their cars, there will be a groundswell for government intervention, and not just by the lefties. The oil companies better do something to get the prices down.
32
posted on
09/15/2005 9:54:43 AM PDT
by
doug from upland
(Arianna Huffington loves that big gas guzzling Suburban)
Comment #33 Removed by Moderator
To: DaisyCutter
Not necessarily. With NG at >$10/bcf and oil >$60/bbl, wind is looking ever more attractive to private investors and utilities. Solar is still not economic on its own, but may pay off with all the tax subsidies we are throwing at it.
34
posted on
09/15/2005 9:56:48 AM PDT
by
oblomov
To: starboardlist
It is an "apparent" 250 mpg, because they are dismissing the fuel required to generate the electricity that they are using to charge the batteries in their modified (extra battery) hybrids. For example, with extra batteries, they can drive 125 miles with hardly using the gasoline engine. Say the gasoline used is 1/2 gallon... do the math, 250 apparent MPG.
35
posted on
09/15/2005 9:57:02 AM PDT
by
Paradox
(Just because we are not perfect, does not mean we are not good.)
To: RinaseaofDs
...and they have been working with regular tinkerer types in the US to modify their cars so that their hybrids indeed get 250 miles/gallon. Will it also fly in the air like the Jetsons' vehicle?
To: doug from upland
Because of fuel prices, huge numbers of people can no longer afford to drive their cars to work. Oh, please. Do you know anyone who has quit his or her job because of high fuel prices?
I never expected to hear an "Al Gore" story from you, Doug!
37
posted on
09/15/2005 9:57:22 AM PDT
by
Alberta's Child
(I ain't got a dime, but what I got is mine. I ain't rich, but Lord I'm free.)
To: Sir Gawain
...." ExxonMobil is spending about $5 billion a quarter buying back its own shares."......
That's the bad news in this release.
If exxon can't find a better investment to fund their future, they spend $20 billion a year to buy back about 2%their stock. So it sounds like they have not found any other investments that have the potential for gains, other than cutting their dividend cash outflow of 2.0% of share price.
Sad!
38
posted on
09/15/2005 9:57:24 AM PDT
by
aShepard
To: RinaseaofDs
Head back to DU.
How can you possibly equate people trespassing and stealing from Walmart to Exxon benefiting from the tremendous risks of capital that it has taken around the world. If you think the price is too high, don't buy the gas.
39
posted on
09/15/2005 9:57:58 AM PDT
by
Looper
To: doug from upland; All
If the government does intervne there are going to be more problems.. I hope the people understand that the left has been trumpting around that gas prices should be high so people can make the right descisions their way...
40
posted on
09/15/2005 9:59:39 AM PDT
by
KevinDavis
(the space/future belongs to the eagles --> http://www.cafepress.com/kevinspace1)
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