[lit-ideas] Oil company profits, Washington Post cut and paste

Check out the sections that talk about tax breaks and subsidies to the oil 
companies, and they're not researching or developing new wells.  Like pharma, 
just pocketing the money.


Oil Majors' 1st-Quarter Earnings Shoot Up
Higher Crude Prices Leave Exxon Mobil, Others Awash in Cash
By Justin Blum
Washington Post Staff Writer
Friday, April 29, 2005; Page E01 
As consumers struggle with high gasoline prices, Exxon Mobil Corp. announced 
yesterday that its revenue totaled more than $82 billion in the first three 
months of the year.
The world's largest publicly traded oil company boosted its profit by 44 
percent, to $7.86 billion, from the corresponding quarter a year ago. That left 
Exxon with a cash hoard of $30 billion. Other oil companies' profits are 
surging as well, leaving them with piles of cash. "There's an embarrassment of 
riches now that is unavoidable," said Lawrence J. Goldstein, president of the 
New York-based Petroleum Industry Research Foundation Inc.
Exxon Mobil pumped an average of about 2.54 million barrels of oil a day last 
quarter -- slightly more than the output of Kuwait. The Irving, Tex.-based 
company's sales for the quarter were more than the annual economic output of 
New Zealand.
Exxon Mobil and other major oil companies are benefiting from the same thing 
that has hurt consumers and is slowing economic growth: high crude oil prices. 
A barrel of oil averaged nearly $50 for the quarter, about 42 percent higher 
than during the same period last year.
Increasing demand in China, India and elsewhere has pushed the world's oil 
production close to its limits, leaving little cushion in the event of a 
terrorist attack or some other problem that affects production. Concern over 
those issues has caused traders to bid up the price of crude.
Among companies reporting quarterly profits in recent days, ConocoPhillips Inc. 
was up about 80 percent compared with the corresponding quarter last year, 
Royal Dutch Shell Group 28 percent, and BP PLC 35 percent.
The major oil companies are selling crude they pump from the ground at higher 
prices while their costs are not significantly increasing. At the gas pump, 
where gas prices remain above $2 a gallon, Exxon Mobil is reaping more profit 
than in previous years as margins have widened slightly, analysts said. But the 
company's officials are quick to note that their gasoline refining and 
marketing is far less profitable than their crude production.
The oil companies, which also produce natural gas, are benefiting from 
continued high natural gas prices, but analysts said those operations have not 
generated significantly more profit than they did last year.
Exxon Mobil's profit has increased significantly in its chemical production 
businesses -- a market segment that has become more lucrative as a result of 
worldwide economic growth bumping up demand.
It said it is returning some of its profit to shareholders by increasing 
dividends and accelerating a stock buyback program. The company has not 
dramatically accelerated spending in exploration and drilling, which analysts 
attributed in part to a lack of opportunities that would yield the kind of 
return that Exxon Mobil demands.
"The whole industry is cash-rich and opportunity-poor," said Fadel Gheit, an 
analyst with Oppenheimer & Co. in New York.
Other major oil companies have also resisted significantly increasing their 
budgets for exploration and drilling, leaving some international energy 
officials concerned about whether there will be enough oil flowing from the 
ground years from now.
The earnings announcements come a week after the House approved energy 
legislation that would give billions in subsidies to oil and gas companies to 
encourage new production. The Senate plans to consider its version of the 
legislation next month. Lawmakers who opposed the legislation said the profit 
reports are evidence that the subsidies are not needed. Rep. Edward J. Markey 
(D-Mass.) said oil companies are asking for subsidies at the same time they're 
"shaking money from out of [consumers'] pockets at the gas pump."
"I'm sure that they are chuckling at the continued support that they receive 
from the Republicans on these subsidies," Markey said.
But supporters of subsidies said that oil prices eventually will fall and the 
energy legislation is designed to encourage production even when that happens. 
"Profits aren't always up," said Rep. Joe Barton (R-Tex.), chairman of the 
Energy and Commerce Committee. "There are lots of times the oil market is 
different and the profits are down or nonexistent."
In 1980, after a rise in oil prices and company profits, Congress approved a 
windfall profits tax on oil companies. As prices and profits have risen during 
the past year, a similar tax has not been on the agenda. Markey said he was too 
busy fighting against oil industry subsidies to press for a tax on oil 
companies.
The industry says that among companies that have reported earnings this 
quarter, profit margins have averaged nearly 9 percent, which is just below the 
average across all U.S. companies that have reported results this quarter. 
Exxon Mobil had a profit margin of about 10 percent. It said its results were 
boosted by the sale of an interest in a Chinese oil company.
"There's no windfall profits," said John C. Felmy, the chief economist for the 
American Petroleum Institute, an industry group in Washington.

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