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Energy companies announce record profits amidst soaring prices for US consumers
This week, the major international energy companies announced sharp increases in profits for the third quarter. The energy giants are benefiting from a prolonged period of rising energy costs, exacerbated in September by the effects of Hurricanes Katrina and Rita. The record profits are being paid directly from the pockets of millions of Americans, who face increased gasoline prices and the prospect of sharply higher home heating bills during the winter.
Leading the pack was ExxonMobil, the world’s largest oil company. Exxon reported third-quarter profits of $9.92 billion, 75 percent higher than its third-quarter earnings last year and the largest quarterly profit ever reported by a US company. The company also boasted revenues of more than $100 billion, another US record and a 32 percent increase over the company’s revenues in the second-quarter.
The Wall Street Journal on Friday noted that Exxon’s profits amounted to nearly $75,000 a minute, every minute, for the entire three months of the quarter (July, August and September). Exxon’s profit for the first nine months of the year, more than $25 billion, already exceeds its annual profit last year. The company made more money in the third quarter than all but eight companies in the S&P 500 made in all of 2004.
ExxonMobil was not alone in reaping huge profits for the quarter. Royal Dutch/Shell reported a company record of $9 billion, up 68 percent from last quarter; BP profits were up 34 percent to $6.53 billion for the quarter; ChevronTexaco reported a 53 percent increase to nearly $4 billion; and ConocoPhillips’s profits jumped 89 percent to $3.8 billion. These five multinational companies are the five largest energy companies in the world and dominate the US energy market.
These staggering sums dwarf what the US government has spent on hurricane relief in Katrina, Rita and Wilma combined. The $43 billion raked in by just these five companies in only 90 days would pay for the rebuilding of New Orleans. So much for the claims that urgent social needs can’t be met because “there is no money.” There is wealth aplenty, but it is in the wrong hands.
Exxon CEO Lee Raymond bristled at the suggestion that Exxon was milking the destruction during the hurricane season to inflate consumer costs. “Profit is not a dirty word,” he told Fox News in a recent interview. “And it’s absolutely required in our industry to have an adequate level of profit to be able to continue to invest.”
In fact, most of Exxon’s profits went directly back into the pockets of the wealthy and into executive salaries, not investment. The company spent $6.8 billion in shareholder dividends and in stock buybacks. Buybacks are intended to keep the stock price high, which yields millions of dollars for top executives who hold stock options. In 2004, another record-breaking year for corporate profits, Raymond by himself received more than $38 million in salary, stock, and bonuses from ExxonMobil. This year, his total compensation package is reportedly worth more than $42 million.
The profits for Exxon and the other energy giants come largely from the rise in crude oil prices. The major energy companies are vertically integrated, meaning that they have stakes in many different levels of the energy sector. They are particularly active in both the initial extraction of oil and the oil-refining process, during which the oil is transformed into different forms, including gasoline. Together, the five companies control 50 percent of US refining capacity. Most also have major stakes in the natural gas industry.
Read More
http://wsws.org/articles/2005/oct2005/oil-o29.shtml
The Wall Street Journal on Friday noted that Exxon’s profits amounted to nearly $75,000 a minute, every minute, for the entire three months of the quarter (July, August and September). Exxon’s profit for the first nine months of the year, more than $25 billion, already exceeds its annual profit last year. The company made more money in the third quarter than all but eight companies in the S&P 500 made in all of 2004.
ExxonMobil was not alone in reaping huge profits for the quarter. Royal Dutch/Shell reported a company record of $9 billion, up 68 percent from last quarter; BP profits were up 34 percent to $6.53 billion for the quarter; ChevronTexaco reported a 53 percent increase to nearly $4 billion; and ConocoPhillips’s profits jumped 89 percent to $3.8 billion. These five multinational companies are the five largest energy companies in the world and dominate the US energy market.
These staggering sums dwarf what the US government has spent on hurricane relief in Katrina, Rita and Wilma combined. The $43 billion raked in by just these five companies in only 90 days would pay for the rebuilding of New Orleans. So much for the claims that urgent social needs can’t be met because “there is no money.” There is wealth aplenty, but it is in the wrong hands.
Exxon CEO Lee Raymond bristled at the suggestion that Exxon was milking the destruction during the hurricane season to inflate consumer costs. “Profit is not a dirty word,” he told Fox News in a recent interview. “And it’s absolutely required in our industry to have an adequate level of profit to be able to continue to invest.”
In fact, most of Exxon’s profits went directly back into the pockets of the wealthy and into executive salaries, not investment. The company spent $6.8 billion in shareholder dividends and in stock buybacks. Buybacks are intended to keep the stock price high, which yields millions of dollars for top executives who hold stock options. In 2004, another record-breaking year for corporate profits, Raymond by himself received more than $38 million in salary, stock, and bonuses from ExxonMobil. This year, his total compensation package is reportedly worth more than $42 million.
The profits for Exxon and the other energy giants come largely from the rise in crude oil prices. The major energy companies are vertically integrated, meaning that they have stakes in many different levels of the energy sector. They are particularly active in both the initial extraction of oil and the oil-refining process, during which the oil is transformed into different forms, including gasoline. Together, the five companies control 50 percent of US refining capacity. Most also have major stakes in the natural gas industry.
Read More
http://wsws.org/articles/2005/oct2005/oil-o29.shtml
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