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Oil Company Bonanza Continues With Record Profits for Shell and Exxon
Royal Dutch Shell and Exxon Mobil emulated BP today by revealing record quarterly profits.
Exxon has made the highest ever quarterly profit by a US company. Again. Royal Dutch Shell, the biggest oil
company in Europe, beat City expectations with third-quarter
current-cost-of-supply profits - which strip out unrealised inventory
gains and losses - up 74% to $10.9bn (£6.7bn).
Exxon Mobil, the world's largest oil company, smashed its own record for the highest quarterly earnings by a US firm by delivering a profit of $14.83bn.
Despite the better-than-expected figures, Royal Dutch Shell shares fell more than 3%, in part because of lower-than-expected production.
"Overall, this is a good outcome," said Tony Shepard, an analyst at stockbroker Charles Stanley. "But some investors will be disappointed by the sluggish production volumes."
Shell said it had benefited from higher oil and gas prices. Crude prices were more than 50% higher and gas realisations were about 48% ahead of the same quarter last year.
Oil prices have fallen by about half from their peak in July when they reached $147 a barrel but the continued scale of oil company profits have prompted calls for lower prices for consumers and the imposition of a windfall tax.
"We are steering the Shell ship through rough waters and so far OK," said the chief executive, Jeroen van der Veer. "Yes, we are generating large profits. Yes, we have the largest investment programme in Shell's history to create value for shareholders and to play our part in providing safe and cost competitive energy for consumers."
He said that, as well as its investment programme to secure energy supplies, his company's strategy remained to pay "competitive and progressive dividends".
The combination of a commitment to investment and dividend pay-outs echoed BP's response this week to questions about the scale of its earnings.
Chief financial officer Peter Voser, who will take over from Van der Veer next summer, said the company was on track to reach its target of asset sales of $5bn this year, although he acknowledged the credit crunch was curbing the number of buyers.
"We are in no rush to sell assets. It's not a fire sale," he said.
Like Shell and BP, Exxon benefited from the high price of crude oil. Its profits amounted to $162m a day or $113,000 a minute, despite disruption caused to offshore production in the Gulf of Mexico by two hurricanes - Gustav and Ike.
"Despite the continuing uncertainty in world financial markets, ExxonMobil has maintained a strong financial position," said the chairman, Rex Tillerson. Capital investment of $19.3bn this year had made "a substantial contribution to employment and economic activity in the countries in which we operate," he said.
The figures are likely to raise hackles among critics of the oil industry. Exxon's previous quarter yielded profits of $11.6bn, which was itself a US record.
The presidential candidate Barack Obama branded the company's earnings as "outrageous" at a time when US motorists were "paying record prices at the pump".
Exxon has been attacked by the environmental movement for its reluctance to invest in alternative energy sources. At the company's annual meeting in May, a significant minority of investors backed resolutions demanding limits on the company's greenhouse gas emissions and a shift towards renewable energy.
The Texas-based company's upstream businesses, comprising exploration and production, enjoyed a 48% surge in earnings to $9.35bn as commodity prices soared, despite an 8% fall in output. Downstream, Exxon's refineries saw profits rise by $1bn to $3.01bn.
The figures comfortably beat analysts' expectations and Exxon's shares rose in early trading on Wall Street.
"US downstream was up from last year, so that was a positive surprise," said Gene Pisasale, an energy analyst at PNC Capital Advisers. "They have the strongest balance sheet in the business."
- Posted in
39 Comments so far
Show All"The presidential candidate Barack Obama branded the company's earnings as "outrageous" at a time when US motorists were "paying record prices at the pump"."
When Mr. Obama is done "branding", does he have an actual plan to address this outrage? No, I didn't think so.
Nothing about nationalizing Big Oil. Nothing about breaking up companies that are "too big to fail." Nothing about putting an end to the use of the US military to guard private, commercial oil pipelines. Nothing about requiring that 50% of Big Oil profits be used to invest in alternative energy research.
Instead of a real plan, we get "branding." That might win some votes; it sure as hell won't solve the problem.
Jeevee
Perhaps this is an naive comment, but WHY are these companies allowed to continue to operate, instead of all their assets being seized and given to the seriously suffering, like the people in Bhopal? The executives of these countries should be jailed for life with no opportunity for parole or reduction of sentence!! Is there such a thing as legal genocide?
Capitalism depends on profits to live and the appetite for those profits simply cannot be satisfied! For example U.S. oil companies have realized world record profits every quarter for the past several years yet Big Oil cannot rest. The fact is, unless they follow these new record 3rd quarter revenues with ever-greater profit into the indefinite future ExxonMobil and Chevron will whither and die. That is why, against every instinct toward justice and economic fairness, the oil company’s servants in the Congress reject a windfall profits tax, have given away billions of dollars of royalty rights revenues, and have moved toward giving up drilling rights prohibitions on the Gulf Coast and in the Arctic National Wildlife Refuge. Today, even the largest corporations, like General Motors and Chrysler, seek the comfort of each other’s arms. They will only survive in combination as wealth is consolidated in fewer and fewer entities!
But wars for resources, higher commodities prices and mega-mergers are only putting off the day of reckoning for capitalism. There is only so much technology can boost production or wages can be depressed until a slave system must be created. Even at that, the system will then stare into the eyes of its fatal contradiction. Slaves cannot buy the products they produce.
Want to be a slave or live in a socialist system? Nationalize the oil industry!
How to do that? Well, what if, on an appointed day at an appointed hour, the American people drove their cars onto streets, roads, and highways near their homes, parked their cars, walked home with the keys, turned on their TV's and waited. Waited for the annoucement of the end of the private ownership of a commodity which is vital to the way we all live. After the people have control of the energy supply return the cars to the house. And start thinking about national health care.
Imagine!
so long as we have economies whose main goal is maximization of gains we will see this kind of robbery and extortion.
in july when oil prices peaked at $147 gas prices peaked at over $4 a gallon. Now oil has come down to $65, which is over fifty-five percent, yet gasoline has only come down around 40%. That means their profit margin has increased yet again!
the solution is more than nationalization, its the implementation of an entirely new economy. personally i advocate parecon.
What's parecon?
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I think, therefore I am dangerous.
participatory economics
Can you elaborate or provide a link to an explanation?
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I think, therefore I am dangerous.
google it. the main place will be www.zcommunications.org
but the wiki article is decent.
"personally i advocate parecon."
Interesting. But I don't see it happening any more than nationalization of oil companies.
"Now oil has come down to $65, which is over fifty-five percent, yet gasoline has only come down around 40%. That means their profit margin has increased yet again!"
Iteresting figures on this, aren't they? Makes you think someone wants us to thank them for stealing from us.
"But I don't see it happening any more than nationalization of oil companies."
The same was said about ending slavery. But there is more to my point than that. The point is we cannot see the future, and if we allow the present to limit our future then what a pity...
"if we allow the present to limit our future"
Never that!
I hope we can end slavery in the world someday, its amazing how little attention it gets.
ground control to major tom: dont be intentionally dense for arguments sake.
before slavery was abolished in the US there were claims that it could never happen because it was so firmly entrenched in our society.
whether something seems immediately possible or not is hardly the point. the main point is whether it is preferable or not, and then working to achieve it... or not.
Now that's a surprise, Big Oil making record profits.
They really have nothing but contempt for us.
Will the governments do anything about them?
I for one doubt it as the oil companies are owned by the Ruling Elite who control the governments.
Here is an idea. Build a mass movement for fare-free urban public transit.
http://freepublictransit.org
Rex W Tillerson, chief executive of the company, said: "Exxon Mobil's strong results demonstrate the continued success of our disciplined business approach."
Translated: Our infiltration of the US political organizations is now complete.
The giant oil companies didn't have to infiltrate O'Bama's party. That party defers to its evil twin on virtually all matters. The bonanza was a primary goal of the White House. O'Bama's party wrote blank checks for all the incompetence and evil. Vote third party to help clear the wreckage and make way for progress. The progressive project is EVERYWHERE.
If we're not going to nationalize the oil companies (which we aren't) then we at least need to impose a substantial windfall profits tax on them, and distribute the revenue from this tax to the citizens. And the poorest among us should get the greatest share - after all, for the most part it's the poorest who pay the highest percentage of their income for gas.
They are bidding on Iraq's oil.
Let Exxon Mobil pay the bill for the war US soldiers are fighting for them, that will eat into their profit margins.
Put Exxon Patches on every soldier's sleeve, let Rex sign their paychecks and Africa here we come.
Go Chavez.
If the next president doesn't quickly re-regulate ALL sectors of the financial industry, including coordination of regulations with other nations, we will continue to experience rogue speculation and market manipulation on an ever larger scale.
These record oil company profits are primarily the result of Ben Bernanke lowering interest rates during late 2007, early 2008, enabling unregulated speculators to spike energy and commodity prices.
Putting Greenspan, Bernanke and the Wall St. pirates on trial for economic terrorism will be an essential part of any meaningful re-regulation.
The oil companies bean counters have their own personal method of figuring the economic "theory" of supply and demand.
It is; ___ "When demand go down, the price goes up ____ when demand goes up the price goes up.
It works very well for them.
~Kem~
Exxon and Mobil must have really been laughing at us back in August when gas was $4.69 a gallon. Now, (gee, how did THAT happen?) it's down to "only" $2.59 or so. Windfall profits thsi quarter?
It's disgusting.
These CEO guys (including Bush, Co.) are criminals and should be teated as such.
You wont be able to nationalize the company's that run the world, but you can take away their strangle hold of power.
We need to put Americans to work building the finest alternative fuel cars on the planet , and then setup a new grid of refueling stations.Electric and hydrogen fuel cells.
And do not let the oil company's own one share of the new energy solutions.
They have had their chance to get us off oil by investing in new technology's and they chose to suck us dry first.
Let them open banks , and with any luck , we can borrow all the money and not pay them back.
No bail out for them or their private army of cointel pro stalkers.
BornFreeMen
Oh boy oh boy! I just can't wait for Exxon Mobile's $14,830,000,000 to trickle down to little old me! By golly I must be the luckiest poor little guy on the planet.
Yay, all that money, it could sustain the Iraq war for another 10 days!!
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I think, therefore I am dangerous.
When the price of a barell of crude was near $160, gas was in the $4 a gallon range. Now with a barell in the $90 range, it's about $3 bucks a gallon. The oil companies are actually makeing more per galon now with the far lower price of crude. They know exactly what they wish to make per gallon and they do it.
Funny, ___ now tha a gallon of regular is $2.80 to $3 bucks a gallon, a lot of people are satisfied. I recall when a gallon of gas was $1.45 and it hurt to filler up. Maybe we are sheep?
"Now with a barell in the $90 range,"
More like sixty.
"Maybe we are sheep?"
That's pretty much it. Collectively, retail buyers show little in the way of willingness to shop around for a lower price, or to curb the use of discretionary driving. That doesn't favor the buyer, and allows the retailers to postpone their little price wars or other reductions.
This stuff isn't rocket science. If a retailer can get it at the pump, they will, if not, they'll lower their price.
Sixty-Dollar a barrel oil went for 99-cents at the pump not long ago. The oil companies' protracted dis-information campaigns, lies over "supply and demand"
( tracing back to 1974) and blaming "The Arabs" for fueling higher prices still is the corporate-governmental line. Now, many Americans and the idiot television "news" media are brainwashed into hallelujahs over $3.00 a gallon prices as "low "! Will the lemmings ever THINK for a minute and consider the lies they've been fed, and demand that this natural resource be taken out of corporate hands and nationalized.
Huh?
You seem to be mixing the prices of a barrel of crude oil and a gallon of refined gasoline.
There was a fundamental shift of power in the oil industry right before 1974. Up until then, the power lay with the oil companies. They had plenty of countries to drill in, so they treated the countries like it was a priviledge for them to have the oil companies come in and drill. They told the countries what they would pay for their oil and the countries had little choice but to accept this.
This changed, not precisely in 1974, but in the few years leading up to that. Various countries realized that the oil companies didn't have more places to drill and that they needed to drill in their country. So, they started setting the terms. This was the era when oil operations were nationalized. Or the sort of deals the oil companies were setting before then were overthrown and the countries started dictating the terms by which oil would be removed from their countries.
And of course, the Arab-Israeli war of 1973 had a lot to do with the 1974 oil crisis. The US was giving lots of aid to the Israelis, and the Israelis ignored the US request to only land the planes carrying equipment at night. Thus, the whole world, and especially the Arab world saw US military cargo planes carrying in guns, ammo and equipment to kill Arabs and make sure the early Arab victories in that war were reversed.
With their newly nationalized oil industries, the Arab nations realized that they now had a weapon in their hand and decided to us. This began the Arab oil embargo which led to the sharp spike in gas prices and long lines at gas stations.
Sorry to puncture your comic-book conspiracy theories, but there really are reasons behind some of this stuff.
But, you are right in the last point. The US should follow much of the rest of the world and nationalize this industry.
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"To know, and not to do, is not to know"
"You seem to be mixing the prices of a barrel of crude oil and a gallon of refined gasoline."
Could you please elaborate on this point.
Isn't crude oil a major component of refined gasoline? If so, is it fair to point out that the last time we had $60 a barrel crude oil, the price of refined gasoline was much lower than it is now?
While the refining process and other "middle man" costs might explain some of the differences, is it fair to say there's some serious price gauging going on with gasoline prices?
"While the refining process and other "middle man" costs might explain some of the differences, is it fair to say there's some serious price gauging going on with gasoline prices?"
Not when you can demonstrate that the public as a whole is willing to accept the asking price at retail and seems unwilling to shop around or curb driving.
I feel your collective pain and anger at this situation. I have felt the euphoria of others wehen gas went below three dollars a gallon and then (after paying 30 some dollars to fill my tank instead of 40 some dollars) wondered what I was thinking.
I too have done the math and figured out that these scoundrels at big oil are making more money at a cheaper price than they were at the higher price due to not only the reduction in cost for their primary raw material but also the increased sales as the "happy motiring" culture reasserted itself.
Finally, I remember noticing a similar plunge in prices that just happened to precede the '04 and '06 elections.
I agree with fakedemocracy that the extravagent wealth of big oil needs to "trickle down" and there is a very simple way to do that--it's called "windfall profits taxes". This should be at or near the top of the agenda of a first 100 days of an Obama adminstration and its veto and fillibuster proof majorities in the Congress and Senate.
Poet
It was always a given that the prices of oil and gas were going to plunge just before the election.
Gas always does that this time of year anyways as they switch their price gouging strategies over to the home heating oil market.
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"To know, and not to do, is not to know"
"It was always a given that the prices of oil and gas were going to plunge just before the election."
This ignores the *international* nature of crude oil market, plus the fact that you can't describe the mechanism behind the "price dial" that "they" turn.
"Gas always does that this time of year anyways "
True since demand is always down as well as no need to formulate the expensive summer blends.
This will continue until a good amount of the population rises up against it. I still don't see less SUV's on the road, I don't see many people driving less, and I don't see anyone making a big deal over the fact that BOTH Obama and McCain get a ton of money from oil companies.
http://www.ryanhartman.wordpress.com
Actually, I do see less SUVs on the road. Especially look at the cars that have the new car paper licenses in the windows. Those are almost never SUVs these days. Meanwhile, I'm amazed at the number of Prius's I'm starting to see on the road.
And, people do seem to be driving less. There was definitely less summer driving this year. And when it was $4 a gallon you did see people trying to do more to combine tasks into one trip.
Of course, the big question is, will that stick as gas falls from $4 a gallon to $2.30 a gallon around here? Or do people forget fast?
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The people who are ridiculed for supporting Nader or McKinney have certainly noticed that Obama and McCain both get money from the oil companies.
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"To know, and not to do, is not to know"
"The presidential candidate Barack Obama branded the company's earnings as "outrageous" at a time when US motorists were "paying record prices at the pump"."
Obama is actually pretty good at pointing out the problems we face. But, the thing to notice is that he never follows this up with anything about what he'll do about it.
The answer to that is nothing of course. Or something just for show. He won't do anything serious to hurt oil company profits precisely for the reason listed in the post before this one .... he (and the Dems in general) get lots of contributions from the oil companies.
Thus, this is just a good example of Obama-bull. Its not an accident that he doesn't say what he's going to do. Instead, since he's going to do what his big contributors want, he just knows us voters wouldn't like the answer if he told us.
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"To know, and not to do, is not to know"
Huh. Imagine my shock.
McCain put out there, this morning, on the ticker tape running on the bottom of the screen, how all this profit the oil companies have made is Obama's fault. He must have forgotten that he voted in the Senate to give these oil companies a big tax break with subsides. At one time, he has critisized Obama for not wanting to give the oil companies more with off shore drilling. I know that the Democrates did roll over and said that they would do that when gas prices started to go up. There are two big oil men in the President and Vice President office, but lets blame Obama. Also, McCain has voted against subsides for wind and solar power where Obama has voted to give it to them to help in renewable energies that would create jobs in our country. I know McCain gives lip service about that but he votes against it.
What's so difficult to grasp about these record profits? It's the squeezing of the last dollar out of the American Peasant. You don't like that word? What else can you call those who adulate their oppressors?