October 27th, 2005
Off topic: Record oil company profits and gas prices
ExxonMobil’s third quarter profit surged nearly 75 percent to $9.92 billion, based on skyrocketing oil and natural-gas prices. It’s the largest quarterly profit in history for a U.S. company. And we thought Google was a hot company. Royal Dutch Shell third quarter profit grew 67 percent to $9.39 billion, riding on skyrocking oil prices. BP profits climbed 34 percent for the same quarter.
ExxonMobil’s Chairman Lee R. Raymond commenting on his company’s third quarter results said: "Following the hurricanes, ExxonMobil maximized gasoline production from all of our refineries which were operating in the U.S., and increased imports from overseas affiliates to meet U.S. demand. We acted responsibly in pricing at our company operated service stations, and we also encouraged our independent retailers and distributors to do the same. Third quarter 2005 results were adversely impacted by the hurricanes, with U.S. production volumes down 50 thousand oil-equivalent barrels per day and additional costs of approximately $45 million before tax. Our earnings in the third quarter reflect the impact of the relatively volatile industry environment on commodity prices and industry margins. Reduced volumes and higher costs will also impact the fourth quarter."
The calculus of record oil company profits during a time of natural disaster and lower production is basically a commodity supply and demand story–but you have to feel ripped off by the oil companies. Raymond’s statement that the third quarter "reflects the impact of the relatively volatile industry environment" is one of the understatements of the year. Sam Bodman, U.S. Secretary of Energy, believes that oil companies should boost refining capacity. That should have happened a long time ago…
Dan Farber, editor-in-chief of CNET News.com, has more than 20 years of experience as an editor and journalist covering technology. See his full profile and disclosure of his industry affiliations.
