I wonder why gas is so high?

[Curt]

Exxon Mobil Posts Record Profit for 2005 By STEVE QUINN, AP Business Writer
11 minutes ago



Exxon Mobil Corp. posted record profits for any U.S. company on Monday — $10.71 billion for the fourth quarter and $36.13 billion for the year — as the world's biggest publicly traded oil company benefited from high oil and natural-gas prices and solid demand for refined products.

The results exceeded Wall Street expectations and Exxon shares rose, but some lawmakers expressed outrage at the industry's latest profit surge, renewing calls for a windfall profits tax and increased investment in alternative fuels.

The company's earnings amounted to $1.71 per share for the October-December quarter, up 27 percent from $8.42 billion, or $1.30 per share, in the year ago quarter. The result topped the then-record quarterly profit of $9.92 billion Exxon posted in the third quarter of 2005.

Exxon's profit for the year was also the largest annual reported net income in U.S. history, according to Howard Silverblatt, a senior index analyst for Standard & Poor's. He said the previous high was Exxon's $25.3 billion profit in 2004.

"What do you expect when you combine record oil and gas prices and strong operations everywhere else?" said analyst Fadel Gheit at Oppenheimer & Co. "Unless prices collapse, earnings in 2006 will make 2005 look like a cake walk."

The company said its average sale price for crude oil in the U.S. during the quarter was $52.23 a barrel, compared with $38.85 a year earlier. It sold natural gas in the U.S., on average, for $11.34 per 1,000 cubic feet, compared with $6.61 during the same period a year ago.

Exxon's vice president of investor relations Henry Hubble said that while strong commodity prices clearly helped drive the record earnings, the company also deserved credit for its ability to complete projects on time while keeping costs in check.

"We continue to identify world-class projects, post industry-leading returns, and are well-placed for continued growth," Hubble told analysts in a conference call. "Our record results show a disciplined approach and we continue to deliver superior value to our shareholders."

Exxon's results lifted the combined 2005 profits for the country's three largest integrated oil companies to more than $63 billion.

ConocoPhillips said last Wednesday that its fourth-quarter earnings rose 51 percent to $3.68 billion, while annual income climbed 66 percent to $13.53 billion. Two days later, Chevron Corp. said its fourth-quarter earnings rose 20 percent to $4.14 billion, while annual income jumped 6 percent to $14.1 billion.

The oil industry's stellar results have renewed talk for a windfall profit tax that would push companies to invest more in new production and refining capacity.

Sen. Barbara Boxer (news, bio, voting record), a California Democrat who sharply criticized oil executives appearing before Congress in November, on Friday called on the Bush administration and the Federal Trade Commission to "put an end to gouging." She then suggested that FTC stood for "Friend to Chevron."

Sen. Chuck Schumer, a New York Democrat who proposed an extra tax on oil company profits in November, said Monday that "the federal government has a responsibility to make sure that these companies continue to innovate instead of just profiting from the status quo."

But John Felmy, chief economist for the American Petroleum Institute, a Washington-based trade group, said Monday that the political rhetoric was "not a case based on fact."

"We invested somewhere in the order of $86 billion last year," Felmy said. "Then we have to treat investors appropriately; otherwise we'd have the Eliot Spitzers of the world coming after us."

Analysts said they are not worried about any fallout from potential pressure coming from Capitol Hill.

"I hope the capitalist system would promote and applaud the hard work of companies that have been smart and lucky to achieve good earnings for shareholders," said Tina Vital, another analyst for S&P.

The results for Exxon's latest quarter included a $390 million gain related to a litigation settlement. Excluding special items, earnings were $10.32 billion, or $1.65 per share. The result topped Wall Street's expectations. Analysts surveyed by Thomson Financial predicted earnings of $1.44 per share.

Exxon shares rose $1.82, or almost 3 percent, to close at $63.11 on the New York Stock Exchange. That is near the upper end of its 52-week trading range of $51.35 to $65.96.

Quarterly revenue ballooned to $99.66 billion from $83.37 billion a year ago but came in shy of the $100.72 billion Exxon posted in the third quarter, which was the first time a U.S. public company generated more than $100 billion in sales in a single quarter.

By segment, exploration and production earnings rose sharply to $7.04 billion, up $2.15 billion from the 2004 quarter, reflecting higher crude oil and natural gas prices. Production decreased by 1 percent due to the lingering effects of hurricanes Katrina and Rita, which battered the Gulf Coast in August and September.

The company's refining and marketing segment reported $2.39 billion in earnings, as higher refining and marketing margins helped offset the residual effects of the hurricanes.

Exxon's chemicals business saw earnings, excluding special items, decline by $413 million to $835 million, as higher materials costs squeezed margins.

For the full year, net income surged to $5.71 per share from $3.89 per share in 2004. Annual revenue grew to $371 billion from $298.04 billion.

To put that into perspective, Exxon's revenue for the year exceeded Saudi Arabia's estimated 2005 gross domestic product of $340.5 billion, according to statistics maintained by the Central Intelligence Agency.

[windowphobe]

$36.13 billion / $371 billion = 9.74 percent.

Geez, my house did better than that.

[BFizzy]

Low Supply + High Demand = High Price

Also, that profit does not reflect how much it costs to find new oil. It costs a lot more to find new oil than to sell old oil. The profit you see is from the sell of old oil. Much of that profit will have to be re-invested to find new oil, which will cost a lot.

Competitors would drive price down if it weren't for OPEC.

[Curt]

Low Supply + High Demand = High Price

Also, that profit does not reflect how much it costs to find new oil. It costs a lot more to find new oil than to sell old oil. The profit you see is from the sell of old oil. Much of that profit will have to be re-invested to find new oil, which will cost a lot.

Competitors would drive price down if it weren't for OPEC.

I dont know about that, I heard this guy on xm radio's Coast to Coast one morning who is supposed to be an expert at this and he was saying that those profits are after they put the monies aside for oil exploration and drilling. So who do you beleive? If I had to choose I would beleive him.

[Curt]

$36.13 billion / $371 billion = 9.74 percent.

Geez, my house did better than that.

So then things like this are ok with you?





Will oil strike $380 a barrel by 2015?
By Adam Porter in Perpignan, France



A steep rise in prices is expected due to growing energy demands






A report prepared by energy economists at the French investment bank Ixis-CIB has warned crude oil prices could touch $380 a barrel by 2015.


Analysts Patrick Artus and Moncef Kaabi said in the next 10 years demand for oil will outstrip supply by around 8 million barrels per day (mbpd).

"If one takes into account the level of previous oil shocks such as in the 1970's, we don't think a price level of $380 per barrel is out of the question," they said.

The analysts argued that the shortfall in energy needs would not be made up by alternatives as they were not developed as yet. "Thus the world will still need to rely upon traditional fossil fuels," their report said.

[PUGalicious]

BFizzy obviously doesn't understand what profits are... revenue minus expenses (including research, exploration and development) = profit.

[Curt]

BFizzy obviously doesn't understand what profits are... revenue minus expenses (including research, exploration and development) = profit.

I guess that is the point I was trying to make, but I am not very good at it.

[windowphobe]

Well, I look at it this way: the pricier the stuff gets, the less painful it will be to shift to alternative fuels and such.

Although at $380 a barrel (which is, I think, slightly implausible), even the lowliest stripper well will be worth opening up again.

[Kerry]

Profit per gallon to Exxon 9.5 cents
Profit per gallon to Government 46 cents (plus the 36% tax on the Exxon profit)

[PUGalicious]

It's hardly profit to the government... a tax, yes, but this government hasn't operated at a profit (i.e. surplus) since Clinton.

And you're naive if you think Exxon will actually pay 36% tax on that profit.

[Kerry]

So which is? Should Exxon run a deficit like the government or should the government run a surplus like Exxon. I'm confused. Which one is doing it wrong?

[PUGalicious]

You seem to be easily confused. So I won't try to spell it out for you because I don't want to confuse you further.

[BFizzy]

I absolutely know what profit is, but thank you for your formula.

My point was that the cost to find the oil that was sold in the last quarter has already been factored in, but the cost to find future oil to replace that oil sold is not factored in. Since oil is a non-renewable resource, exploration costs get higher and higher and that will cut into their profits more and more over time.

Also, keep in mind that Exxon's record profits are in dollars not as a percentage. 27% profit increase over a year is not uncommon at all. In fact, it is a decrease from the previous year. Exxon is the largest company in the world and when it makes a 27% profit, that equals a lot of money.

There are two reasons why Exxon made a large profit this last quarter:

1.) Exxon increased the volume that it sold.
2.) The price Exxon sold it at was higher than when they extracted it or bought it from other producers.

It is that simple.

[Kerry]

Who said oil is a non-renewable resource?

[BFizzy]

Definitions of non-renewable resource on the Web:

a resource which cannot be replaced once it is used up, for example fossil fuels (oil, natural gas and coal).
www.energyinst.org.uk/education/glossary/

A resource that is not replaced or only replaced very slowly by natural processes.
www.esd.rgs.org/glossarypopup.html

Minerals, oil, gas and coal. Their use as material and energy sources leads to depletion of the Earth's reserves and are characterized that they do not renew in human relevant periods.
http://www.dantes.info/Projectinform.../Glossary.html

A resource whose total quantity does not increase measurably over time, so that each use of the resource diminishes the supply. Old Growth Timber is a non-renewable resource because 200 to 1000 year old stands of trees cannot be readily replaced, especially if management dictates that they will continue to be cut every 60 years.
www.umpqua-watersheds.org/glossary/gloss_n.html

[PUGalicious]

I absolutely know what profit is, but thank you for your formula.

I apologize, but based on your comment, it wasn't clear.

My point was that the cost to find the oil that was sold in the last quarter has already been factored in, but the cost to find future oil to replace that oil sold is not factored in. Since oil is a non-renewable resource, exploration costs get higher and higher and that will cut into their profits more and more over time.

True, so why not look for new forms of energy rather than continuing to invest in a diminishing resource?

Also, keep in mind that Exxon's record profits are in dollars not as a percentage. 27% profit increase over a year is not uncommon at all. In fact, it is a decrease from the previous year. Exxon is the largest company in the world and when it makes a 27% profit, that equals a lot of money.

That's true. But it's still a lot of money. And with all that money comes the question, why does our government subsidize that industry with $14.5 billion in tax breaks?

There are two reasons why Exxon made a large profit this last quarter:

1.) Exxon increased the volume that it sold.
2.) The price Exxon sold it at was higher than when they extracted it or bought it from other producers.

3.) Exxon profited from perceived shortfalls in supply rather than actual shortfalls.
4.) Exxon profited from diminished competition from recent mergers.

It is that simple.

Yes, it is.

[BFizzy]

I agree completely with number 3 and 4.

[Kerry]

So over the next 100 years no new oil will have been created? At least in a measureable amount.

[windowphobe]

Depends on whom you believe. If it's all dinosaur juice, then forget about it; if there's some being formed today in the crust of the Earth from whatever organic matter may exist there, then it will presumably turn up.

[Curt]

Depends on whom you believe. If it's all dinosaur juice, then forget about it; if there's some being formed today in the crust of the Earth from whatever organic matter may exist there, then it will presumably turn up.

I dont beleive that our oil came from decaying dinosaurs, and if it does there must have been alot of those creatures on the earth at one time. If I bury a horse in the ground it will never turn into oil, so I dont beleive that our oil now was in the form of dinosaurs back then.Maybe decaying plant matter, now that I can beleive.

[windowphobe]

Well, of course your Sinclair stations are using dinosaur juice. Says so right on the sign.

[Curt]

Well, of course your Sinclair stations are using dinosaur juice. Says so right on the sign.

Maybe you have a good point there:spin:

[Patrick]

Shell gets their oil from the remains of sea shells from years and years ago.

[Curt]

Shell gets their oil from the remains of sea shells from years and years ago.

LMBO!!!

[Jack]

Diamond Shamrock gets their oil from a lepercaun. Black gold at the end of a rainbow.