EXXON TAKES ON GAS PRICE RAGE

exoon, oil, earningsClick the chart for more on Exxon Mobil.
By Ben Rooney, staff reporter

NEW YORK (CNNMoney) — In an attempt to deflect rising anger among American drivers and political leaders, Exxon Mobil said Thursday that it makes relatively little money producing and selling gasoline, even as the oil company reported a nearly $11 billion quarterly profit.

Ken Cohen, Exxon Mobil’s vice president of public and government affairs, attributed the recent surge in oil prices to a combination of rising global demand, political instability in the Middle East and a weak U.S. dollar.

In a lengthy statement sent to reporters, Cohen lashed out at the task force recently created by the Obama administration to crack down on speculation in the oil market.

“We understand that it’s simply too irresistable for many politicians in times of high oil prices and high earnings — they feel they have to demonize our industry,” he said.

Cohen also said federal and state taxes make up 40 to 60 cents of the price for a gallon of gas, compared with the 7 cents per gallon that Exxon Mobil earns.

He argued that most of the company’s profit comes from its overseas operations, and that earnings in its refining business, which converts crude into oil and diesel, make up only 6% of its earnings.

In response to recent criticism of tax loopholes for the oil industry, Cohen said Exxon has paid nearly $59 billion in U.S. taxes over the last five years, including $9.8 billion last year.

The comments came after Exxon Mobil, the world’s largest publicly traded oil company, said it earned $10.7 billion, or $2.14 per share, in the first three months of 2011. That’s up from $6.3 billion, or $1.33 per share, in the same period last year.

Analysts had forecast earnings of $2.06 per share, according to Thomson Reuters.

Exxon chief executive Rex Tillerson said the performance reflects higher crude oil and natural gas “realizations,” using industry jargon for prices.

Tillerson also pointed to strength in Exxon’s chemicals business and improved refining margins, which makes converting crude oil into gasoline more profitable.

Oil prices averaged $95 a barrel in the first quarter, compared with $79 a barrel in the first quarter of last year.

But the rally in the oil market accelerated toward the end of the quarter, with prices powering above $100 a barrel in March. In April, oil prices have averaged nearly $110 a barrel, up 20% from the start of the year.

While oil prices remain below the record highs of nearly three years ago, the recent surge has raised hopes among investors that 2011 could be another banner year for Exxon.

In 2008, Exxon reaped the largest annual profit of any company in U.S. history, reporting a whopping $45 billion on the back of high oil prices. Its largest quarterly profit, $14.8 billion, came in the third quarter of that year.

Meanwhile, consumers have been hit with near-record prices for gasoline in many U.S. states as crude prices surge. In addition, high energy and transportation costs have contributed to an increase in food prices.

Despite the strong results, shares of Exxon (XOM, Fortune 500) edged down 0.6% to $87.27 each. But the stock is up 20% so far in 2011, making it the best performer in the Dow Jones industrial average after Caterpillar (CAT, Fortune 500).

Exxon said production in the quarter was more than 10% higher than 2010, driven by its projects in Qatar and other “unconventional [natural] gas production.”

Earnings from the company’s global exploration and production business rose $2.8 billion to $8.6 billion in the quarter. Exxon said higher oil and gas prices boosted profits by $2.6 billion.

Exxon said earnings from its oil refining operations totaled $1.1 billion, compared with $37 million in the same period last year.

In its chemicals business, Exxon reported record $1.5 billion in quarterly profit.

Sales rose 26% to $114 billion in the quarter, slightly below market expectations.

Other major oil companies have also benefited from the recent runup, including Royal Dutch Shell (RDSA), which said Thursday that profits rose 40% in the first quarter to $6.9 billion. Chevron (CVX, Fortune 500), the world’s second-largest publicly owned oil company, is scheduled to report results Friday.  To top of page


Article source: http://rss.cnn.com/~r/rss/money_topstories/~3/7DL6hitpIXo/index.htm

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