t-man: blog 
t-man's blog
what did the oil companies do with their record profits?
Published May. 21, 2008Here is an article that I just found, and I was quite surprised!
Below is a small exerpt, and the full article is available here
For example, take a look at ExxonMobil (XOM, news, msgs), the biggest publicly traded U.S. oil company. It generated $40.6 billion in net income last year and $36.6 billion in free cash flow. What did it do with those riches?
It gave $38.4 billion back to shareholders -- $7.4 billion in dividend payments and $31 billion through share buybacks.
Let's put that $38.4 billion in perspective. Assume the average household spent $2,200 on gasoline last year, up 10% from the $2,000 the Bureau of Labor Statistics (BLS) says they spent in 2005, the latest numbers available.
- This means the windfall profits that ExxonMobil gave back to shareholders last year were enough to buy all the households in both California and Pennsylvania gasoline for the entire year.
- It was enough to give everyone a 27 cents-a-gallon discount on gas nationwide for the whole year.
Despite ExxonMobil's generosity with shareholders, it's made so much money recently that it still had $31.4 billion in cash, net of debt, at the end of the first quarter of 2008. This year, ExxonMobil plans to give $24 billion back to shareholders in the form of buybacks and more than $8 billion in dividends.
This despite the fact that, as my colleague Jim Jubak reported recently, Exxon's production is falling.
What do you think?
close17 Comments
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GOLO member since April 10, 2008
May 22, 2008 3:58 a.m.
Do you understand the oil market at all? Oil companies do not generally speculaute on
In fact, "speculation by institutional investors pouring money into the commodities market may be largely to blame for spiking oil prices, according to testimony on May 20 before the Senate Committee on Homeland Security & Governmental Affairs." (Business Week)
Institutional investors are corporate and government pension funds, university endowments, and sovereign wealth funds, many of whom are located offshore.
Maybe even your own retirement fund, WEbguy, if you happen to have one.
GOLO member since August 16, 2007
May 21, 2008 2:06 p.m.
I know it is general belief there is gouging. It is not the case. The future traders are making the money on perceived value. That is no different than the housing bubble. Some people got caught in the flipping mess cause they figured no matter how high they paid for a property, they could turn in for a profit. Some learned the hard way what goes up, will come down. The same will happen with the oil futures trading. At some point traders will be holding contracts at a price they can not unload. So then they either need to dump the contract at a loss or purchase the actual commodity at the price of the contract. You have it wrong as far as the politicians go. President Bush has pushed for more domestic drilling since he went into office. The Democrats even when they were in the minority successfully blocked the drilling. So here we are now, with China and India and other countries pushing up global demand. Call your friendly Democrat if you want it fixed.
GOLO member since October 18, 2007
May 21, 2008 2:03 p.m.
A windfall profits tax is bull. All that will do is further raise the price of gas.
GOLO member since October 3, 2007
May 21, 2008 1:51 p.m.
Oil companies are robbing us via speculation and currency fears/manipulation. Their "punishment"? Free R&D cash from the government. The fedearl and state gas taxes are not something to add to the balance sheet any more than sales tax is for clothes, food, or anything else.
The oil companies are playing a game of liar's poker. For six years under a Republican president and congress, the governemnt voted by the people and paid for by big oil asked no questions as a sizable chunk of our economy went out of the citizens' wallets and into the oil company's coffers.
Meanwhile, thousands of our country's servicemen and women are paying the ultimate price to control the flow of oil from Iraq. How many oil employees are picking up a gun to root out insurgents? None. Big oil charges more because of the war's instability and does not pay for military ops.
GOLO member since October 19, 2007
May 21, 2008 1:42 p.m.
T
GOLO member since July 13, 2007
May 21, 2008 1:31 p.m.
GOLO member since October 9, 2007
May 21, 2008 1:30 p.m.
GOLO member since July 6, 2007
May 21, 2008 1:29 p.m.
GOLO member since October 18, 2007
May 21, 2008 1:27 p.m.
GOLO member since November 17, 2007
May 21, 2008 1:27 p.m.
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