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Exxon Posts First-Quarter Profit of $8.4 Billion

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Exxon Posts First-Quarter Profit of $8.4 Billion

Business

Exxon Posts First-Quarter Profit of $8.4 Billion

Exxon Posts First-Quarter Profit of $8.4 Billion

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Exxon Mobil Corp., the world's largest oil company, reports that higher oil prices drove its first-quarter profit up 7 percent from the prior year. Net income rose to $8.4 billion, from $7.86 billion in the same period a year ago.

STEVE INSKEEP, host:

The business news starts with oil company profits getting bigger.

ExxonMobil, today, is reporting first quarter profits of nearly $8.5 billion. $8.5 billion in three months. That is up from the same very profitable quarter last year, but still below Wall Street expectations. Joining us now to talk about today's announcement is Phil Flynn, senior market analyst at Alaron Trading in Chicago. Mr. Flynn, did I pronounce it correctly?

Mr. PHIL FLYNN (Senior Market Analyst, Alaron Trading Co.): You sure did. Good morning, Steve.

INSKEEP: Good morning. That's great. Is Exxon any different from other oil companies in announcing increasing profits?

Mr. FLYNN: No, I don't think they are. But I think that the earnings--the coming out less than expected show that the oil companies have had some challenges. Because of the aftermath of Hurricane Katrina and the increased risk of trying to find oil in the world today, I think that's one of the reasons why the earnings weren't quite as high as some people had anticipated.

INSKEEP: How do those risks translate into higher costs for oil companies that offset some of the gains they get from the very high price of oil?

Mr. FLYNN: Well, what it is is that you have to pay more people to go in dangerous area to go and find oil. You have to replace a lot of the refineries and the pipelines and the production that was lost due to Hurricane Katrina. These are real costs and real concerns for the oil companies right now, and they do cut into these record profits. And it is a situation that the oil companies do have to overcome.

INSKEEP: Let's talk about political risk now; do the oil companies face trouble as more of these reports come out of increasing profits?

Mr. FLYNN: Obviously, they do. And it's not necessarily a good thing for the American people, because I think that there is a growing discourse against the oil companies, which, in the long run, is going to be a detriment to the American people. You know, people have to realize that these record oil company profits really have been a reflection of a strong U.S. economy and growth in this country. And, you know, we're really kind of going after, you know, the golden goose that has been providing some of this economic growth.

You know, we can't grow our economy without energy; and if our economy is going to continue to grow over the next ten to twenty years, we're going to have to feed it with more and more energy. You know, oil companies, right now, don't only have to compete with other oil companies right now, they have to compete with other countries for a dwindling supply of oil.

INSKEEP: All right. Mr. Flynn, thanks very much.

Mr. FLYNN: Thank you.

INSKEEP: Phil Flynn is a senior market analyst at Alaron Trading in Chicago.

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