ExxonMobil: Part of a $123 Billion Dollar Embarassment

April 4th, 2008 • Related • Filed Under
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(This post has been corrected based on input in a comment from “Billy”)

With the “top five” leading the way($117 billion) , oil companies posted a record $123 billion dollars in profit last year. ExxonMobil recently announced its highest profit ever- $40.6 billion dollars. The other four companies are Shell Oil($27.5 billion), BP America, Inc.($17 billion), Chevron ($18.8 billion), and ConocoPhillips ($11.9 billion).

I pondered these figures last week while filling my gas tank.

That means ExxonMobil alone earned $109 million dollars per day.
$415 dollars for every second of 2007.

Pure Profit.

I did a few more calculations.

The United States uses about 20 million gallons of gasoline per day. At $3.10/gallon, that’s a total cost of $62 million dollars income per day. Say half of that is profit (it’s probably higher). That’s $31 million dollars profit per day on US customers alone. $11.3 billion dollars per year.

Profit.

Now let’s do the math for different gas prices:

Price/gallon Gross income/day Profit/day Profit/year
- (millions) (millions) (billions)
$2.50 50 25 9.1 billion
$2.00 40 20 7.3 billion

That means, if we were paying $2.00/gallon for gas per day, ExxonMobil would be making, on its US business alone, 7.3 billion dollars profit per year. And the US accounts for only 30% of their business. Foreign consumers pay even more for fuel then we do.

In my opinion, $7.3 billion dollars is enough profit for any company to make. And if you keep touting rising prices due to newfound global oil shortages, $40 billion is a gluttonous embarrassment.

I guess if you give retirement packages like the one former Exxon Mobil Chairman Lee Raymond received - $400 million in 2005- you need to make those kinds of profits.

Isn’t it also interesting that it was Hurricane Katrina that caused the original price surge in September of 2005. That month prices increased from $2.45 to $2.95. One year earlier, the price was $1.84. This was due to a reported “disruption in fuel supplies from the Gulf of Mexico.” Sounds a little fishy to me- sounds like Raymond earned that $400 million. And how come the prices haven’t come down since then?

Now there is talk of gasoline reaching $4.00/gallon this summer. If ExxonMobil can make $40 billion dollars in one year, why is our price continuing to go up? It’s blatant, in your face, price gouging.

These companies need to be regulated. The US government needs to act now. Otherwise, just like the banks, it is every man for himself. Profit at any cost.

And with no real competition, the oil companies can pretty much set their price.


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There Are 16 Responses So Far. »

  1. Comment by Billy on 6 April 2008:

    You obviously don’t let facts get in the way of your beliefs, from how much an oil company profits from a gallon of gasoline to how much ExxonMobil made in a year($41B in 2007). ExxonMobil made ~75% of its profits outside the US. Ponder this fact next time you are filling your tank, over the last 5 years Exxon Mobil’s US tax bill exceeded the company’s US earnings by $19 billion.

  2. Comment by Lisa on 6 April 2008:

    I stand partly corrected. That $123 billion was profit for the top five oil companies, and ExxonMobil’s share of that was 40 billion. That’s after tax profit, however. And it doesn’t take away the fact that all of these are record high profits at a time when all U.S. consumer costs are rising. Rising oil/gas prices are based on opportunistic greed, and are unnecessary.

    Thanks for the correction,
    Lisa

  3. Comment by Lisa on 7 April 2008:

    @ Billy: I want to thank you, again, for pointing out my error. I’ve corrected the post. I believe you’ll find all my facts and references in order. I do understand that this is an opinion piece, and there is another side to this opinion. If you would like to submit a guest post offering that other side, I would be glad to review it for submission.
    Otherwise, please feel free to speak your opinion in the comments.
    Best,
    Lisa

  4. Comment by Kyle on 14 April 2008:

    Not to stir the pot, but I would like to point out that $40 billion is actually only a mediocre profit when you take into account how large a company Exxon is. Absolute profit numbers by themselves are meaningless. If I invest $1 million in a company and I make $1 million in profit the first year, that’s huge. I’ve doubled my investment. If I invest $100 million in a company and make $1 million profit, that’s really bad. That’s only a 1% profit margin and I would have been better off not investing the money at all. Oil companies like Exxon are much, much closer to the 2nd example than the first. Sure, $40 billion SOUNDS like a lot of money, but it’s not when compared to how much investors pumped into the company. Exxon is a $476 billion company. That means its Price/Fair Market Value margin is only about 8.4%. Not all that impressive, really. The oil industry goes through boom and bust just like every other industry. Currently it’s in a boom cycle and everybody is calling for their profits to be capped. Ok that’s fine, but were you also screaming for oil companies to get huge, massive government subsidies in the late 90’s when oil was $12 per barrel and oil companies were losing massive amounts of money? I doubt it. It’s all part of the business cycle. This too shall pass.

    Kyle’s last blog post..Invest In The Long Tail: An Amazon.com Case Study

  5. Comment by Lisa on 14 April 2008:

    @Kyle- thanks for stirring the pot! There’s room for all thoughts and opinions here. I’m open to having my mind changed through good discussion. Though in this case, I disagree with your statement that $40 billion is a mediocre profit. That was their highest profit ever! Since the beginning of time! Doesn’t sound so mediocre to me. What am I missing?

    Best,
    Lisa

  6. Comment by rstlne on 2 May 2008:

    Exxon-Mobil’s profit margin in the last quarter was 11.8%, whereas Microsoft’s profit margin was 28.3%. Yet, you’re calling for regulation of the former, not the latter?

    rstlne’s last blog post..River and Mountain

  7. Comment by Lisa on 4 May 2008:

    @rstine- the SUV fill up costs site is great. You make a good point about Microsoft. I’ve heard they’re brutal about maintaining their turf. I still have no sympathy for Exxon. It’s their highest profits ever, when we’re paying the highest prices ever. Doesn’t that bug you even a little?

    Best, Lisa

  8. Comment by tony on 15 May 2008:

    Remember China? Remember India? The falling US dollar? The increased demand for oil worldwide? Although I get that oil is comparable to water in that some people believe the price should regulated, there are many forces at play here. Just remember that there was a windfall profits tax levied on oil companies in the 1980’s and if was a disaster and made us even more dependent on foreign oil. When will we ever learn: governments don’t make the economy go round, corporations do(even the “evil” ones that make crazy profits). There will always be greedy people. Liberals are always so generous —– with other people’s money.

  9. Comment by Bill on 1 June 2008:

    Great post! Thanks for your submission to the Rants blog carnival! Keep them coming. I share your view on the oil companies, though I have a hard time convincing myself that anything should be done about it other than letting the market decide.

    In that light, we should just stop driving so much.

  10. Comment by Texting Freak on 6 June 2008:

    I have to say reading this article makes my blood boil as I think about how much money these oil executives are making while the working class suffers so much. It’s quite reprehensible. I honestly don’t know what to do myself, but I hope more people in power realize that the oil companies have an ethical and moral responsibility to make fuel affordable if they can.

  11. Comment by Lisa on 7 June 2008:

    @Texting Freak- great point.It’s amazing to think how much power these companies have over the entire world.Scary. Hopefully alternative technologies will start competing for our energy dollars soon.-Thanks for your thoughts.Hope to see you again.-Lisa

  12. Comment by Trackbacks on 3 July 2008:

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