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Tuesday January 31, 6:38 AM
Political row erupts as ExxonMobil posts record profitExxonMobil Corp. booked record earnings of 36.1 billion dollars in 2005, reviving claims that the oil industry is profiting from sky-high prices at the expense of hard-pressed consumers. ExxonMobil, the world's largest oil company, saw its net income rocket 43 percent from 2004 on the back of record-breaking prices for oil and natural gas.
Chevron Corp. and ConocoPhillips Inc. have also reported huge income over the last year, causing several opposition Democrats to weigh in with complaints after a summer of discontent against the oil majors. "ExxonMobil's record profits may be great news for the company's shareholders, but it is grim news for American consumers who are paying through the nose for gasoline at the pump and home heating oil for their homes," Democratic Representative Edward Markey said. "The (White House) policy of subsidizing wealthy oil companies has proven to be wildly effective in boosting oil company profits, but it continues to harm American consumers and threaten economic growth," he added. Democratic Senator Hillary Clinton called on President George W. Bush to use his State of the Union address Tuesday to set up a strategic energy fund and to roll back billions of dollars in tax breaks extended to oil firms last year. ExxonMobil chief executive Rex Tillerson acknowledged "a great deal of public interest" in energy prices and recognized that consumers and businesses worldwide want "affordable energy". But he stressed: "Our strong financial results will continue to allow us to make significant, long-term investments required to do our part in meeting the world's energy needs." The Texas-based company's fourth-quarter net income smashed Wall Street forecasts. Its revenue climbed 19.5 percent to 99.66 billion dollars in the fourth quarter, and by 25 percent to 371 billion dollars over 2005. Last week Chevron Corp., the second-biggest US oil major after ExxonMobil, reported a 6.0 percent rise in its annual earnings to 14.1 billion dollars. ConocoPhillips's net profit surged 66.4 percent over 2005 to 13.5 billion. The surge in oil prices helped the US giants overcome production disruptions caused by several hurricanes over August and September, which served to send gasoline (petrol) pump prices skywards. Called to account by the US Congress in November, the heads of the big energy companies combatively denied they were profiteering and stressed the enormous investments required by their industry. A full-page advertisement taken out by the American Petroleum Institute, an industry-funded group, in Monday's Wall Street Journal said the record earnings in 2005 were much less on average than posted by other sectors such as banking. But the political controversy has not gone away as summer has turned to winter and heating bills have climbed by an average of 35 percent over last year for US homes warmed by natural gas. Democrats have seized on a recent report in the New York Times that said energy companies have been underpaying the government by hundreds of millions of dollars on the oil and natural gas they extract from federal land. However, Alaron Trading energy analyst Phil Flynn said there was nothing untoward about the record earnings given the billions that the oil companies have to invest in exploration and production. "The danger is we create the impression that oil majors are evil and end up passing laws that end up hurting the consumer even more," he said.
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