Oil industry unapologetic for high profits

(AP) — The oil industry’s massive first-quarter profits this week triggered another round of election-year outrage from President Bush and members of Congress, who spoke up on behalf of angry constituents feeling pinched at the pump.
There’s little that either lawmakers or the industry can do in the short-term about the high oil prices that yielded those profits, however, as long as energy markets stay tense and the global economy is expanding. Instead, it would take a decision by consumers and businesses to consume less fuel, a choice they have yet to make, analysts said.
The country’s three largest petroleum companies – Exxon Mobil Corp., Chevron Corp. and ConocoPhillips – posted combined first-quarter income of almost $16 billion, an increase of 17 percent from the year before.
In a bit of an understatement, Exxon Mobil’s vice president of investor relations Henry Hubble said “industry conditions remain robust.”
Crude-oil futures are trading near $72 a barrel. U.S. gasoline prices are above $3 a gallon in many places, and even have climbed above $4 in southern California. Yet demand continues to rise.
The trends have convinced Wall Street the 2006 earnings of the nation’s three largest oil companies will surpass last year’s combined record of nearly $64 billion.
“It is hard to find any reason to be sympathetic toward the oil companies today, but that doesn’t make them evil,” said Robert Ebel, director of the energy program at the Center for Strategic and International Studies in Washington.
For their part, the oil companies have been emphasizing that they make far less money on each dollar of sales than many other industries that aren’t being excoriated for their capitalism.
Taken together, Exxon, Chevron and ConocoPhillips made a profit of $8.19 on every $100 in sales. In contrast, Internet bellwethers Google Inc., Yahoo Inc. and eBay Inc. collectively turned a $19.20 profit on every $100 of their combined revenue.
Still, as important as the Internet has become, energy remains more vital.
The combined first-quarter revenue of Exxon, Chevron and ConocoPhillips totaled $191.5 billion – more than the individual gross domestic products of 189 different countries, including the likes of Chile, Denmark, Peru and Venezuela, according to statistics compiled by the Central Intelligence Agency.
Even as politicians snipe at the oil industry’s profits, the government has been sharing in the windfall from high gas prices. In the first quarter, Exxon, Chevron and ConocoPhillips turned over a combined $13.8 billion in sales taxes – about 7 percent of their total revenue.
Chevron also is receiving a financial lift from a deal that Congress helped make last year. The San Ramon, Calif.-based company bought rival Unocal Corp. for $18 billion eight months ago, prevailing over a higher offer from a bidder backed by China’s government. The Chinese bidder, CNOOC Ltd., withdrew after Congress threatened to block a Unocal sale to a company outside the United States.