- The Washington Times - Saturday, February 2, 2008

HOUSTON (AP) —Exxon Mobil turned a profit last year fat enough to buy a fill-up for every car, truck and SUV in America — four times.

Beating its own record to rack up the largest annual corporate profit in American history, Exxon Mobil Corp. said yesterday it earned $40.6 billion for the year, reaping the benefits of crude-oil prices around $100 a barrel.

Exxon Mobil also topped its own record for profit in a single quarter, posting net income of $11.66 billion for the final three months of the year — about $1 billion more than the same period in 2005, the previous quarterly record.

The annual profit was enough, at $3 a gallon, to buy nearly four 15-gallon fill-ups for the roughly 243 million registered passenger vehicles on American roads. Put another way, it’s almost equal to what Microsoft has offered to buy Yahoo outright.

And the quarterly profit alone is about the same as the size of the entire economy of Iceland or Namibia. The previous record for annual profit was $39.5 billion, posted by Exxon Mobil in 2006.

Chevron Corp., No. 2 behind Exxon Mobil among U.S. oil companies, also had its best year ever in 2007, saying yesterday that it banked a profit of $18.7 billion.

The results were eye-popping but not a total surprise: For most of the fourth quarter, oil prices hovered around $90 a barrel, 50 percent higher than a year earlier. Crude reached a new high of $100.09 on Jan. 3 but has fallen about 10 percent since that time.

Revenue at Exxon Mobil rose 30 percent in the fourth quarter to $116.6 billion from $90 billion a year ago. For the year, sales rose to $404.5 billion, a figure just slightly lower than the U.S. Defense Department’s fiscal 2007 budget.

Exxon Mobil, which produces 3 percent of the world’s oil, pegged high commodity prices as the impetus for its results but also touted its far-reaching businesses.

“We continued to supply crude oil and natural gas volumes to meet the world’s energy needs through disciplined development and operation of our globally diverse resource base,” said Chairman Rex Tillerson.

But at a time when many fear the U.S. economy is sliding into a recession, or is in one already, not everyone is applauding the results.

With the economy weakening and the prospect of $4-a-gallon gas looming for spring and summer, the hefty oil profits immediately renewed charges that Big Oil was profiting at the expense of most Americans.

Within hours of Exxon Mobil and Chevron reporting their results, Sen. Charles Schumer, New York Democrat, a member of the Senate Finance Committee, urged Congress to repeal tax breaks for the oil industry.

“Congratulations to Exxon Mobil and Chevron — for reminding Americans why they cringe every time they pull into a gas station and for reminding Washington why it needs to act swiftly to break our dependence on foreign oil and roll back unnecessary tax incentives for oil companies,” Mr. Schumer said.

The Foundation for Taxpayer and Consumer Rights called for greater regulation of energy-trading markets. The watchdog group has said congressional moves for more market oversight have been blocked by the oil industry’s powerful lobbying efforts.

Many analysts believe speculative investors played a role in driving oil prices above $100.

“There’s no excuse for continued inaction by Congress and the White House,” said Judy Dugan, the consumer group’s research director.

The criticism is nothing new to Irving-based Exxon Mobil, which has reported gargantuan profits in recent years during spikes in commodity prices. Those spikes typically make it more costly for consumers to fill their tanks and heat their homes.

In 2005, when the price for a gallon of gas first reached $3, top oil executives were hauled before federal lawmakers to explain profits and assure customers they weren’t being gouged.

Industry representatives say it’s important to note oil companies invest large portions of their profits back into their businesses. Exxon Mobil, for example, said yesterday its spending on capital and exploration projects increased to nearly $21 billion last year, up 5 percent from 2006.

It also noted its U.S. tax bill from 2002 to 2006 was $59.9 billion, and that its worldwide effective income tax rate for 2006 was 43 percent.

What’s more, finding new supplies of oil and gas is becoming increasingly expensive and difficult. The recent boom has pushed up prices for labor and equipment and forced the companies into more remote, challenging environments.

“These companies continue to face formidable reserve replacement, production growth and cost challenges,” Moody’s Investors Service said in a recent observation.

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