Exxon Mobil Posts Record-High Profits
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ROBERT SIEGEL, host:
And I'm Robert Siegel.
This is a good time to be in the oil business. ExxonMobil reported record quarterly profits today of nearly $10 billion. The company is receiving sky-high prices for both crude oil and gasoline. And as NPR's Scott Horsley reports, that more than makes up for cleanup costs for the recent hurricanes.
SCOTT HORSLEY reporting:
For a company that just chalked up the most profitable three months in US corporate history, Exxon isn't doing much gloating. Vice President Henry Hubble was matter-of-fact during a conference call this morning in announcing Exxon's $9.9 billion profit.
Mr. HENRY HUBBLE (Vice President, ExxonMobil): Overall, we had a strong quarter. We achieved a number of important milestones while successfully dealing with the many challenges brought about by the hurricanes.
HORSLEY: Hurricanes Katrina and Rita did sideline two Exxon refineries in Louisiana and Texas that are just now starting up again. The storms also cut into production of crude oil from offshore platforms in the Gulf of Mexico. But hurricane damage made gasoline from Exxon's other refineries that much more valuable; the same goes for crude oil, with prices briefly topping $70 a barrel.
Mr. HUBBLE: The hurricanes had a significant impact and resulted in rapid changes in commodity prices. Due to the loss of industry refining capacity, refinery margins increased. With the rise in prices, consumption was reduced and additional imports were attracted. In short, the market worked, and in recent weeks, prices have declined.
HORSLEY: Gasoline prices have fallen back to pre-Katrina levels. But with many refineries now focused on gasoline, the price of diesel fuel has soared to a record high of nearly $3.16 a gallon. That's a headache for Vice President Tom Engler of Seward Motor Freight. The Nebraska-based trucking company buys more than 200,000 gallons of diesel fuel every month.
Mr. TOM ENGLER (Vice President, Seward Motor Freight): It's been a struggle because, basically, the fuel has gone up so much so fast, and we don't really have a way of recouping that. So I'm sure at the end of the year, it's going to be reflected probably in little, if any, profit.
HORSLEY: Engler says not knowing what the cost of fuel will be a month from now makes it hard to set his own prices. With more than two-thirds of oil production in the Gulf of Mexico still shut down, the Energy Department expects crude oil prices to average in the low 60-dollar-a-barrel range well into next year. While that's shy of the hurricane highs, analyst Doug MacIntyre notes it's still more than double what the price of oil was two years ago.
Mr. DOUG MacINTYRE (Analyst): When crude oil prices dipped below $60, people got fairly excited about that, whereas if you had said they were going to be $60 a year ago, people would have thought you were nuts.
HORSLEY: Those high prices mean big profits for Exxon and other big oil companies. Royal Dutch/Shell earned more than $9 billion in the third quarter; BP pocketed nearly $6 1/2 billion.
Because most of those profits ultimately come out of the pocketbooks of drivers, the companies risk a backlash from consumers and politicians. Senate Majority Leader Bill Frist today ordered an investigation of energy prices, including testimony from oil company executives. Earlier this week, House Speaker Dennis Hastert challenged oil companies to spend their profits on new oil and gasoline supplies.
Representative DENNIS HASTERT (Republican, Illinois; Speaker of the House): These companies need to invest in America's energy infrastructure and resources. It's been 30 years since we've built a new refinery in this country, and we need to start doing it again.
HORSLEY: Exxon said today it's beginning to produce new oil in places like Angola, thanks to investments it made when prices were lower. The company spent nearly $4 1/2 billion on new exploration in the third quarter. At the same time, Exxon spent even more than that, $5 billion, buying back its own stock. Scott Horsley, NPR News.
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