Exxon profits this quarter

[Ken Neeley]

Unbelievable!!! :angry::angry::angry:





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

 

[Texas Transplant]

It's a vicious cycle, isn't it?



People want cheaper gas.



People also want the companies that they invest in to make profit.



People who own companies (public or private) want to make a profit. How much profit is reasonable? Should we 'limit' the amount of profit that a company can make?



Here in the Carolina's, we finally found out what price the gas has to be, before they will conserve and/or change their habits. It's about $3.00 a gallon. My park-n-ride bus is now virtually full every morning/evening with those that are finally changing their habits.



If the demand goes down, so will the price and eventually the profits.



Tex

 

[Bryan McDonough]

Exxon doesn't set oil prices.... The market does. Why should exxon not be able to make a big profit? Exxon is gonna have to spend that money which is going to definately help ceratin areas of the economy.

 

[TOMMY RICH]

Sure it will:angry:

 

[Brian Bell2]

BMCD,

Wake up and look around, Oil companies are making Billions and Billions of dollars in net profit and we have folks that cannot afford to drive to thier minimum wage jobs...



On MSNBC and FOX News the other night they showed the NET ( thats NET profit after all expenses ) for the top 5 or 6 Oil companies last quarter. The high was over 500 Billion $$ to the low of just under 1 Billion $$ profit for 1 quarter after all expenses. In my opinion, this is ridiculious, understanding we live in a free enterprise country, where we have the right to make as much $$ as the market will bear. But Oil & gas prices effect the entire economy, from the gallon of milk to the new house being built down the street. In my opinion Congress needs to get involved, ( Not the Pres and his partner ) as they have a vested interest in Oil.



Just my humble American .02

 

[Tony Payne]

There are some things in life that are no longer optional.



I have no issue with "Sony" making a bajillion dollars off of the playstation game system... they can control production such that demand favors the price for a time.



Other things, such as fuel (for heating or driving), much like electricity and water, are no longer "optional" things.



When the Oil Companies, while technically not a Monopoly, are able to be an "Effective Monopoly", that is where I expect things to change. All gas stations charge the same thing, or darn near, regaurdless... so if Exxon wants to make more, and reais teh price, everyone else gets to do the same thing.



Billions in NET profits is borderline abuse on what many consider to be a necceisty, on an item that affects nearly EVERYTHING in the economy (face it, the cost of bread, etc will also rise due to increased shipping expenses).

 

[TrepMan]

OK so what is the suggestion to change this? Make the Oil/Gas companies (and associated industries) government owned? Put a cap on the profits (thus heavy regulation)??



I guess I sit in the middle on this one.



What about when the times are hard? In the 70's in Texas when whole towns went belly up due to a major downturn in the oil industry? If we cap/regulate them in good time (from a profit perspective, maybe they've gotten extremely productive and efficient??? don't honestly know) do we lock/freeze prices higher in bad times so they can continue to be profitable and not go out of business?



OK and this will not go over well but...

we have folks that cannot afford to drive to thier minimum wage jobs...

Have those folks stopped buying "luxury items" at the same time (booze, cigarettes, lottery tickets, eating out, big cars/boats...)??? I'm sorry, and some of you have heard this story before so I will be brief - In the late 70's my dad's business went belly up (he took too much risk to expand and buy a competitor in a market that could not sustain the growth), and we sold our fancy Ford Crown Vic and Granda and bought a VERY used/rusted $300 stationwagon and dad spent about $200 on a wrecked/rebuilt Honda Civic 2 door 5 speed. He worked as the Night mgr in a liquor store in a HIGH crime neighboorhood so he could make the mortgage payment and mom went back to work to help put food on the table. My hanukah presents that year I figure totaled $5! Dad worked 2-3 jobs for over a year to get back on our feet. NO help from the Goverment, we relied on our family to help us get buy (grandpa bought groceries when needed, he drove us to baseball practice...). So I have ZERO tollerance for the adults working minimum wage jobs. Put your mind and body to the task and you can succeed! Now granted there are, I will attest, folks who do not have the mental or physcial capabilities to graduate past minimum wage, and there we need some goverment support as well as family/chuch/community support.



OK Off my high horse, wish I had bough Exxon stock last year!!!

 

[TOMMY RICH]

NO Trep! The Guvment needs to quit listening to these "whinyassliberalists" that don't want us to drill in our OWN backyard!

We can't seem to be idependent on anything...and that's SORRY for the U.S.!

 

[Rob LaMoy]

I believe in free enterprise, however, this IS price gouging plain and simple. As stated above there are certain required commodities that need to have their prices and the profits raked in by the manufacturers, distributors, etc, governed closely.



If Exxon wants to play the "free enterprise" card, then the government should step in and rather than subsidize these scumbags, take that money and build 10 new federally owned refineries that operate on a fixed, low profit rate, (enough only to pay for themselves and their operation) to drive down the market prices. Tap into the federal reserve, begin pumping more domestic oil and get Canada to come down on their prices as well. Then take all these ungrateful middle eastern countries we keep bailing out, and rather than just simply dismissing their debt to us, confiscate it back in the form of crude oil.



WHY is gas in Iraq only $0.10 a gallon???? They are in impoverished country right??? Then nobody should need gas as they aren't able to afford cars! Sell the gas to the US at $0.25 a gallon, make a 250% markup and use that money for their new democracy and the US will drive gas prices down.



There is PLENTY that can be done if Washington would get off their @$$es and just do it! But they won't , not as long as they keep get billions in tax dollars from it!



There are certain vocations that require gas and lots of it.



Truck drives....already getting a tax cut for fuel

Farmers.......Ditto

Pro fisherman????? Nothing

Contractors/Construction workers....need trucks and trailers to do their jobs.

Delivery drivers

Taxies

Ferries and buses



Oh and EVERYONE needs fuel oil unless they heat with electric or all wood. And now since everyone is making the move to wood to heat, that cost is going up out of control as well.

 

[TrepMan]

Wait a minute...

If Exxon wants to play the "free enterprise" card, then the government should step in and rather than subsidize these scumbags, take that money and build 10 new federally owned refineries that operate on a fixed, low profit rate, (enough only to pay for themselves and their operation) to drive down the market prices.

IF we operate in a capitalistic, free market economy, then NO WAY can or SHOULD the Imperial Federal Governement use the police powers it has to " take that money ", this is NOT a dictatorship or a Socialist government.



IF we as the PEOPLE of this country believe, for example, that Oil/Gas production/refineries/transportation companies SHOULD be regulated...Then that is when we inform our representatives to draft a BILL that would be come LAW and voted in the House/Senate by OUR Representatives. This gives US the people the ability to read the proposed bill, contact our representatives and TELL them how we the PEOPLE believe they should vote...And off we go... The elected officials vote AGAINST the constituents, then we vote him/her out next election or have a recall.



Hey, i'm not thrilled with the price or profits (unfortunetly i have NO oil stocks) and like wise i'm not THRILLED with Delta Airlines paying its retired/fired Execs' 10's of MILLIONS and then take my pillow/snacks away on flights I PAY for. BUT, I have a choice to fly a different company, drive or take a bus.



We are NOT a nation of energy conscious folks, get real. How many of you complaining about the profits drive a TRUCK or SUV with a V-8 that a smaller vehicle would tow your boat more efficiently, or for that mater run a smaller OB/Boat to save/conserve gas? Anyone got an electric boat they use primarly?? ( know some of the northern folks use trolling motors on electric only lakes).



My point is, this is NOT a point in time problem, it is a larger issue WE all have to decide how WE want to handle. I wonder if some of the folks complaining about the profits were employed by Exxon (and/or their families) and they got a nice BONUS this year where they had not in the past, and could afford to buy that car/boat/trip for cash for once, would you be complaining?



What about Home Depot that will most likely (like other home repair companies) post record profits due to the HUGE increase in building/repair/emergency products, should we also ...

step in and rather than subsidize these scumbags, take that money

???

 

[Tim Jeffers]

While I think the recent spike in the gas prices is unjustifiable, I know more gov't regulation is NOT the answer. When is the last time the gov't actually fixed something? If the gov't puts caps on the price of fuel there will be a lot of gas stations with empty tanks. The companies will simply sell their fuel to China, India, Etc. where they can get their asking price. I can pay their price or I can find ways to conserve, but the Government is not the solution, imho.



TJ

 

[Tony Payne]

This is one of those rare areas that I think Government oversite could be beneficial... much in the same way that our utilities are regulated.



It's not as if we have a choice on where we buy the gas, in that they all seem to be in "collusion" over the pricing... which amounts to price fixing.



There simply is no incentive for them to DROP prices...and raising it is way to easy for them to justify.

 

[Tony Payne]

Trep...



It's not that the Gov't Should step in and "Take their profits"... it's that they Government should stop PAYING them thru tax breaks and incentives.





Tax breaks and incentives should go to the companies/people that acutally need them (the ones taht are barely making a profit, or etc...) instead of those raking in BILLIONS in NET PROFIT.

 

[TrepMan]

Sim - I agree with your last part "There simply is no incentive for them to DROP prices...and raising it is way to easy for them to justify."



We can only shop at gas stations in our town, and while there (around here) maybe 20 cents/gallon difference, thats NOT true free enterprise, as you know. I am just with TJ, i've not seen a government program I like yet, that runs efficiently as designed and does NOT turn into the Pork Producer that most do, or turn into a wealth redistribution system.



So.. My question still stands.. What SHOULD we or the Government do that WILL make a difference?

 

[Tony Payne]

Well, the first thing the Govt 'should' do is to investigate (what little good that will do) the seemingly monopolist practices and price collusion that appears to be happening.



The second thing that could then happen is that it becomes a "regulated industry" similar to the way current utilities are run and overseen.



I do not, nor would I want, the industry to be Gov't owned and operated.



I do expect tehm to make a profit... but BILLIONS NET seems exhorbinant.



What can we, as consumers, do? other than be more concious of our usage, little... and that is the entire reason we have anti-monopoly laws that the Gov't should enforce.

 

[Tony Payne]

Mike...



I'll bite.



If they were making billions and the price of gas had remained unchanged, I would APPLAUD THEM... becuase this meant that they were able to keep up with demand and had been able to streamline production/processes.



If they can only make BILLIONS in profits becuase they have raised prices 200% and intimated a looming shortage (where none exist) in order to drive up stock prices, and when they do this in a way that, on the surface, appears to be "just cause we can", then I have a problem.



Again, I say this not because they are making billions on a "luxury" item, but because they are making billions on an essential utility that affects the entire economy and people basic livelyhood.



And its not the amount of profit... it's the method I question.

 

[Ken Neeley]

re: Exxon profits this quarter by BMCD,9/8/2005 10:47 ET



Exxon doesn't set oil prices.... The market does. Why should exxon not be able to make a big profit? Exxon is gonna have to spend that money which is going to definately help ceratin areas of the economy.

First of all, Exxon is not putting that profit back into the economy....they are using it to buy back their stocks.

And while the increase in demand with China and India emerging with stronger economies does affect the pricing, it does not affect it to the magnitude of increases we are currently experiencing. What does affect the prices more is the gas futures market, which is hugely specualtive. Futures have been trading for several years much higher than supply-and-demand warrant, opening it up to abusive and manipulative trading, and who do you think profits from that???



Most people think the main problem is with our refining capabilities. No new refineries have been built in over 29 years....



Why didn't they build more, you might ask??? Main reason-----OPEC.

Refining is historically a low-margin business, and with the EPA constraints adding to the expense of building/running one, it is too risky of a venture due to the Opec cartel.



OPEC, of which the USA is NOT a member, has the sole and exclusive ability to open/close the floodgates at will, as seen in the 70's.

If domestic companies begin ramping up refinery capabilities, and decrease the dependence on foreign oil, all OPEC has to do is open her up and let the oil flow, creating an increased supply and driving prices down.

I wouldn't want to invest 4-6 billion dollars with that kind of risk hanging over my head.



On the reverse side, when OPEC decides to limit production, the prices climb and the profits increase for the oil producers.

Here's where it really pisses me off.....when OPEC does decrease supply, and all 11 member nations abide by this, Exxon and the others are free to ramp up their production and profit from the artificially increased prices, thereby reducing the cartel's effectiveness of stabilization, which is why OPEC was formed in the first place. :wacko:



Our refineries are currently running at 95% capacity, but are still only supplying the same amount of gas as in the 70's. Therefore, we buy ALOT of REFINED gas from Europe, and we buy it CHEAPER than we can refine it ourselves. So why not take some of those billions and billions of profits and BUY MORE??? They won't because that would lower prices and reduce their profit.



It's a vicious, f**king cycle, and I don't have any answers......



I'm done, where's the tylenol. :angry:

 

[Ken Neeley]

Wow...is this discussion over?

 

[Ken Neeley]

Oh puh-lease!!! There are a lot of people here with more smarts than I. :blink:

 

[Texas Transplant]

We don't build many new refineries, for many of the same reasons that we don't build new Nuclear plants. The costs and time to build them in this country are prohibitive. Too much red tape, regulations, restrictions and bureauocracy. Also, most coastal communities (where they need to be built), don't want them anymore.



Let's remember folks, it's not like you can't get gas - it's just expensive right now. Remember, it's supply and demand. Right now, the demad is still outstripping the supply.



It would seem to me that many pro and amateur anglers should just park thier rigs until the gas gets cheaper. After all, for many of them, there is no payback anyway. They are really just giving their money to a handfull of other anglers.



Tex

 

[Ken Neeley]

Tex,

It's not simply a matter of supply and demand.....the demand has not increased 50-70% over the supply, but the profits have increased that much over the last 2 years, and the prices have increased well over 100%.



Those increases are much higher than the supply/demand warrants over that time period.



And, the supply is there if we want to buy more already refined gas from Europe.

 

[Texas Transplant]

Beg to differ Ken. It is simply a case of supply and demand. We DEMAND more and more fuel, and are obviously willing to pay for it. Until people cut back, it will keep going up.



Tex

 

[Ken Neeley]

Let me rephrase.....It is not simply a case of supply and demand as defined in the marketplace for the S&D model for gasoline.



We are not DEMANDING enough additional fuel to justify the price increases of the last 2 years.



If I could figure out how to make my car run on natural gas, I'd eat more beans!!! :lol:

 

[Paul P]

The cause of this problem is definitely difficult to explain precisely. All points play some part in this problem. On the other hand, the problem itself is pretty clear as a consumer and a tax payer. Government has a part in this industry and given the situation they need to take steps to address the issue. I can't tell you the best solution but I expect the government to have an impact to drive prices down and I as a consumer will be using less.



Paul

 

[Bryan McDonough]

Supply in the oil business is a theoretical number. No one knows what it is really is. Opec is reluctant to tell anyone what there operations are capable of.



So we guess and speculate what supply is, albeit there probably close to the right number. Opec is already promising daily output that was more than some thought they could produce daily. So enters speculation and the market takes off.



I agree the mark up in the last 2 years on oil and gas is more than just us getting close to the theretical supply ceiling. Lots of speculation about guess' on how much oil is left and what supply really is causes sellers and buyers to to be scared.



Same thing when is comes to refineries. It was speculated that refineries would not be able to keep up with demand this year, but they did for the most part.



Exxon will be spending money this year on services, and you can gurantee that. indirectly Bonuses given to employees trickle out to other markets because employees feel better bout spending.

 

[Bruce Moore]

Here I go again, thanks Ken. Not quite as eloquently as Ken has presented his side of this, here's mine. Prior to hurricane Dennis, 5000 watt generators were selling at Lowes for 499.00. After the hurricane, the same generators were being offered by a company in Ft. Walton Beach Florida for 1100.00. This to me is reprehinsible. I feel the same way about the oil companies. My family has cut our travel down to "bare bones" back and forth to work, period. In my eyes it is vulgar for the oil companies to post the kind of profits that they are, when I am doing everything that I can to conserve. Sure, this is a capitalist market. But, why is it wrong to expect the oil companies to concede profits for the "good" of the population and country,instead of the selfish position they are taking because "they can".



Dumb and politically incorrect in south Alabama:angry:



BruceM

 

[Texas Transplant]

Just read this morning in the Charlotte paper, that part of our gas price problem was the .50 cent 'penalty' that was put on gas for any dealer that took more than a certain amount, while the supplies were interrupted.



We are now seeing the prices drop. Regular in Rock Hill (SC) where I live, is now back down to $2.89 a gallon. Not cheap by any means, but certainly falling.



Tex

 

[TrepMan]

Just filled the Nitro up last night for the first time since I bought it from Rich, just over 18 gallons at $2.79/gallon, over $51 total. SURE i'd love to have gas back at $.49 a gallon from the 60's. But thats not reality today.



I guess what i'm hearing from some of you is more government regulation of the Petrolium business is in order, to keep profits reasonable and prices down.



But, again, if thats a direction will those who agree, agree with the following:



What about when the times are hard for oil industry? In the 70's in Texas when whole towns went belly up due to a major downturn in the oil industry? If we cap/regulate them in good time (from a profit perspective and price) do we lock/freeze prices higher in bad times so they can continue to be profitable and not go out of business?