WASHINGTON, Oct 27: The US economy might be slowing, but the oil industry is riding a “black gold” boom as gushing oil wells swell the corporate coffers of ExxonMobil, Chevron and ConocoPhillips by billions of dollars.
Corporate America is used to vast profits, but the oil industry’s earnings dwarf all other industries, including banking, technology, and food and drink.
The country’s largest energy group, and the world’s biggest company, ExxonMobil Corp., posted record third-quarter profits of $10.49 billion, or around $114 million a day, on Thursday.
Its earnings swelled by 26 per cent over the same period a year ago, largely as a result of searing-hot crude oil prices which hit records over $78 in July and August, although they have since fallen to around $61 per barrel.
Put in perspective, ExxonMobil’s quarterly profits at over $10 billion were bigger than the latest quarterly profits of banking titan Citigroup ($5.5bn), Internet search colossus Google ($773m) and beverage giant Coca-Cola ($1.5bn) combined.
Wall Street and industry analysts have cheered such astronomical earnings, but Democratic lawmakers, including senators Hillary Clinton and John Kerry, renewed their calls this week for an end to oil industry tax breaks.
Industry executives, meanwhile, have been careful not to over celebrate the sector’s high returns and kept their earnings comments to shareholders tempered.
“Higher crude oil and natural gas realisations, and improved marketing and chemical margins, were partly offset by lower refining margins,” ExxonMobil chairman Rex Tillerson said of the Texas energy firm's results.
Chevron’s Dave O’Reilly said on Friday, as the California-based group posted bulging quarterly net profits of $5 billion that the company’s refineries had worked more efficiently.
“Downstream profits increased to $1.4 billion in the third quarter, driven by higher utilisation of our US refineries and improved refined-product margins in most of our areas of operation,” O'Reilly said.
He spoke two days after rival ConocoPhillips announced quarterly profits of $3.87 billion, and as the political heat mounts days ahead of the November 7 US congressional elections, with the Democrats vying to retake control of the legislature.
“Over $10 billion in profits during this quarter alone are what Big Oil got in return for writing the energy bill, reaping billions in taxpayer-funded giveaways, winning commercial access to federal lands and rolling back environmental initiatives,” Kerry thundered in a statement.
“Is it any wonder, then, that Exxon has contributed 89 per cent of their campaign contributions to Republicans?” Kerry said.
Oil executives bristle at suggestions of unfettered profits, saying their profit margins are lower than those of other industries, despite claims from some lawmakers, such as Democratic Senator Barbara Boxer, that they are “manipulating supply.”
At congressional hearings into their operations, executives have said earnings are big because the industry is big and stressed that extracting oil from under the sea or the Arctic tundra is technical and very costly. They point out that it costs tens of millions of dollars to build an oil rig, float it out into the Gulf of Mexico and keep it pumping oil around the clock.
Executives also say the industry donates millions of dollars to charitable causes and that crude prices have risen partly as a result of the growing economic demands from states like China and India. — AFP