Oil profits unsurprising after record gas prices, N.C. experts say
Posted October 30, 2008 6:34 p.m. EDT
Raleigh, N.C. — North Carolina experts said that after record-high gas prices, reports of record-high profits by oil companies should also be expected.
Exxon Mobil Corp., the world's largest publicly traded oil company, reported income Thursday that shattered its own record for the biggest profit from operations by a U.S. corporation, earning $14.83 billion in the third quarter.
The Irving, Texas-based company reaped massive earnings from exploration and production, where net income rose 48 percent to $9.35 billion. Higher oil and natural gas prices propelled results, even though production was down from the third quarter a year ago.
During that quarter, retail gas prices hit around $4 a gallon nationally, but since July, crude oil prices have fallen 56 percent off their record highs.
Some drivers said that they were outraged that they were paying record-high prices while oil companies reaped profits.
"It just gets me so made, makes my blood boil," motorist John Tremper said, while filling up his tank at an Exxon station.
"They made all that kind of money, and people here are losing their jobs," driver Melvin Sutton said. "There's more to it than making a profit. They need to share some of it."
Other drivers, however, were more sanguine about Exxon's profits.
"It's a business. They got to make money. They go to pay for the rigs they build," motorist Scott Bennett said.
North Carolina oil-industry experts pointed out that only 1.5 percent of Exxon's shares are owned by company management and said the oil giant's profits benefit a broader base of people than most assume.
"The oil companies are not owned by space aliens," Bill Weatherspoon, executive director of the N.C. Petroleum Council, said. "They're owned by ordinary, everyday citizens who are teachers, firefighters, state employees."
Weatherspoon said that Exxon makes a profit of 10.8 cents on every dollar in revenue – contrasted to 29 cents on the dollar for Microsoft, 20.8 cents for Johnson & Johnson and 19.4 cents for Coca-Cola.
"There are many more entities that are much more profitable than the oil companies," Weatherspoon said.
But those oil profits are more publicly scrutinized than companies like IBM or Microsoft, the director said said, because "we are very visible. We are part of everybody's daily purchases."
Weatherspoon said that ExxonMobil "regularly reinvests" its profits into exploration and cleaner burning fuels.
Some drivers, though, suggested other ways that Exxon could use its profits.
"It's ridiculous. It's such a big rip-off," Tremper said. "They should take that money and turn around and lower these gas prices."