The Marketplace Report: Oil Giants Look to Shield Profits

Exxon-Mobil on Monday announced record fourth-quarter earnings of more than $10 billion. Alex Chadwick talks to Bob Moon of Marketplace about efforts by Exxon-Mobil and other oil companies to downplay impressive gains, due primarily to the high global cost of crude oil, as they fight legislation to impose a tax on their profits.

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ALEX CHADWICK, host:

Back now with DAY TO DAY.

The world's biggest oil company just rang up what's believed to be the most profitable year for any company in U.S. history. Texas-based Exxon-Mobil Corporation reported it had a profit of more 36 billion dollars last year. It's the latest in a series of great profit reports from the U.S. oil industry. From MARKETPLACE's bureau in New York, Bob Moon joins us.

Bob, these are very impressive numbers. Any surprises?

Mr. BOB MOON (New York Bureau Chief, Marketplace): Well Alex, actually, we could see this coming last week. We were watching the kind of windfall that a lot of other U.S. oil companies were reporting for the final quarter of 2005. We've already had Chevron, Conoco-Phillips, Marathon, and Amerada-Hess all reporting big profit increases. In fact, Marathon's earnings in the fourth quarter almost tripled; earnings at Hess almost doubled, so these are very good times for the oil industry, and they are absolutely the best of times for Exxon-Mobil. As you mentioned, profit for the year of $36 billion.

This past quarter was, in fact, the best on record for Exxon-Mobil, profits up 27 percent. Over the last three months of the year, profit was 11 billion dollars. It rang up total sales just short of 100 billion dollars, and that's just over three months. And, by the way, much of this record profit from the oil industry is coming from our wallets. We're paying at the pump. For every barrel of oil processed into gasoline and other fuels, the average profit has widened out to a record of almost $11 per barrel.

CHADWICK: You know, this is a terrific business story, but in all this, I think I've read a couple of reports that Exxon is displaying a very sort of modest approach to this, what one would think is just glorious news.

Mr. MOON: Yeah, Exxon-Mobil, and the rest of the industry for that matter. The earnings released today from Exxon-Mobil didn't really make much hay over this. They focused instead on a stock buy-back plan. As you may know, there is a reason for this; it's a mixed blessing for, not just Exxon-Mobil, but the industry in general, because there are moves in Congress to pass legislation that would impose a windfall profits tax on the oil companies, and so they're sort of trying to downplay this.

CHADWICK: If Exxon-Mobil just got the biggest profit in history, does that make it the biggest company in history? How tied is this?

Mr. MOON: Well, it depends on which way you look at the numbers. Exxon-Mobil figures said its revenue for all of 2005 was 371 billion dollars, and that would move Exxon-Mobil past Wal-Mart stores as the biggest U.S. company by sales. And by the way, just to give you some idea of how big Exxon-Mobil is...

CHADWICK: Yeah.

Mr. MOON: ...what it made in sales for the whole year figures out to be more than the gross domestic products of Sweden, Taiwan, and Indonesia, so it's making a lot of money. Today in the MARKETPLACE newsroom, we're finding out that Alan Greenspan didn't just have an affect on the U.S. economy, but on pop culture as well.

CHADWICK: Well, thank you Bob Moon of Public Radio's daily business show MARKETPLACE, produced by American Public Media.

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