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Exxon Posts More Record Profits

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Thu, May 1, 2008 at 10:31 am

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Exxon Posts More Record Profits

NEWS RELEASE

May 01, 2008

ExxonMobil Profits Soar to Record On Speculative Oil Prices While Consumers and Economy Suffer

Santa Monica, CA — Record first-quarter profits, up a staggering 17
percent to $10.89 billion reported today by ExxonMobil, the world’s
largest oil company, came as the result of crude oil profits driven by
unregulated speculative trading, said Consumer Watchdog.  Soaring
gasoline and diesel prices have devastated the U.S. economy and helped
push consumers deeper into debt, yet President Bush and Congress have
engaged in mindless finger-pointing and failed to take obvious steps to
ease the pain.

“With gasoline prices topping $4 a gallon in some cities and averaging
$3.60 nationwide, nobody is surprised to see the latest string of
outrageous profits posted by Big Oil,”  said John M. Simpson, consumer
advocate with Consumer Watchdog (formerly the Foundation for Taxpayer
and Consumer Rights). “But what people cannot understand — and will
not forget — is that their elected representatives are shirking their
responsibility to take obvious steps that will ease the crisis.”

“People are driving less, but for every trip they cancel, rising prices
at the pump more than wipe out their savings,” said Simpson. “They pay
a second time as inflation at the grocery store is driven by fuel
surcharges on every truck delivery.”

The nonprofit, nonpartisan Consumer Watchdog and its Oilwatchdog.org
project have called for action to quell market speculation and cut back
taxpayer subsidies to oil companies (see below), but the most obvious
immediate action is for the White House to stop buying market-priced
oil for the federal Strategic Petroleum Reserve, which is at record
high levels above 700 million barrels, and start selling a fraction of
the reserve back into the market.

At a Rose Garden News Conference this week Bush refused to stop
purchases for the reserve.  He also blamed Congress for not allowing
oil drilling in the Arctic National Wildlife Refuge (ANWR) even though
it would take a decade before oil could be obtained if drilling were
allowed today.
 
“Purchases for the reserve, at these record oil prices, come straight
from the pockets of taxpayers, and by taking oil off the market they
fuel continued speculation,” said Judy Dugan, Consumer Watchdog
research director. “Yet President Bush has turned a deaf ear on pleas
by Congress and consumer advocates to take the small, painless and
beneficial step of curbing this excess. There is no strategic benefit
more important than using the oil reserve to aid consumers and offset
energy inflation.” (See Consumer Watchdog’s letter to President Bush here.)

Exxon’s profits were a record for a first quarter and were the second
highest ever for any U.S. corporation.  Exxon’s 2007 fourth quarter
earnings of $11.66 billion are the all time record. During the first
quarter of 2008 the oil giant piled up profits at the rate of $5.08
million an hour or $84,000 every minute. (See more historical data at Consumer Watchdog’s “Oil Profits Monster” database. Quarterly data and charts for Shell and BP will be updated by 11 am PDT.)

With the announcement of record profits, Exxon also said it had bought back $8 billion in its own shares.

“This is money that could have been used to lower prices for consumers
and invested in alternative energy research,” said Simpson. “Instead the company is taking a short-term, profit-maximizing approach that has even upset some of its most important shareholders.”

On Wednesday descendents of John D. Rockefeller, who founded Standard
Oil, ExxonMobil’s precursor, called a news conference in New York to
say the oil giant is overlooking its effect on the environment and the
future of alternative energy. They also backed a resolution that would
split the roles of chief executive officer and chairman, now held
jointly by Rex Tillerson.

“When America’s first family of oil speaks, ExxonMobil should pay attention,” said Simpson.

Tell ExxonMobil to shift its massive profits away from investing in oil, and towards renewable energy sources!

Exxon’s refining profits did not match the increases from oil sales,
but that was in part because the oil giant is selling its own petroleum
at inflated prices to their own refineries, said Consumer Watchdog. The
current upward spike in pump prices is unlikely to stop even if crude
oil prices abate, because refiners are now working to boost profits on
their end of the business.
 
“When one uses the spreadsheet to compare the price at the pump with
the quarterly company profit reports, it is clear the companies have
inflated bottom lines by raising pump prices far in excess of any
actual increased cost incurring from the highly publicized increase in
the commodity price of crude,” said Tim Hamilton, independent oil
analyst. “Since the average pump price for regular unleaded was back at
$3.11 during the first quarter, next quarter profit reports can be
expected to reflect prices approaching $4 at the pump and set yet
another new record.”

 
Consumer Watchdog has called for:
 
- Action by President Bush to stop adding to federal Strategic
Petroleum Reserve and sell from the reserve to stabilize and drive down
oil futures price.  Link to CW letter to White House.
 
- Closure of the “Enron Loophole” in commodity trading regulation. A
regulatory measure in the federal farm bill (S.2058 by Sens. Dianne
Feinstein and Carl Levin) would regulate trading markets to help stop
speculative oil pricing. (See more on Enron Loophole and farm bill amendment.)
Regulators should also increase the amount of margin funds that traders
must put up in energy markets to help suppress speculation.
 
- Senate approval of an alternative fuels bill (HR 5351) funded by
withdrawing $1.8 billion a year in unjustified taxpayer subsidies to
oil companies. This measure, passed by the House, has not been taken up
in the Senate, where opponents are using a filibuster tactic to block
passage. A similar House measure was removed from the federal energy
bill by the Senate last year under pressure from the oil lobby.
 
- Oversight of refinery operations, including regulation of national
gasoline supplies. In the last decade, the average on-hand supply of
gasoline has dropped from 30 days’ worth to about 22 days. This makes
prices increasingly sensitive to any cuts in gasoline production.
 
Consumer Watchdog (formerly The Foundation for Taxpayer and Consumer
Rights) is a leading nonprofit, nonpartisan consumer advocacy
organization.
 
For more information, see www.consumerwatchdog.org or www.oilwatchdog.org  
 
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This post was written by:

J. M. Simpson J. Court

- who has written 8 posts on Oil Watchdog.


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