Exxon Mobil posts biggest US quarterly profit ever

[LilBastage]

Approximately 75% of Exxon's net income is earned outside of the US. They make about 4% profit on a gallon of gas. They do not set the price of oil. In my state (MN) we have price controls on gasoline (and they aren't mandatory maximums, but mandatory minimums) so they don't even set the price of gas at their stations here.

It costs Exxon about $11 billion to bring an oil platform online and millions per year to run and maintain that platform. It costs about the same (give or take a billion or two) to build a new refinery and bring it online. Think about that. The numbers in the energy business are just HUGE.

Exxon makes money hand over fist, that's for sure. But their profits are in line with any other business when one looks at the big picture and not just the raw numbers. They provide a product that is in high demand, they're going to make a boatload of money. Most of that money goes to it's shareholders. Almost every person with a 401k or an investment in mutual funds is reaping the rewards of Exxon's profits. In many cases, it may have been the only bright spot in your portfolio over the last quarter.

Big business is not "evil" by any stretch of the imagination. Big business drives the economic engine of the world. Big business employs a lot of "little guys" (both directly and indirectly) and provides huge amounts of money to the government in the form of taxes. That is reality.

The high costs of municipal governments is a completely different story and is related more to those governments spending well beyond their means and counting on bad investments. In most cases local governments are just as greedy, inefficient, and corrupt as the state and the federal governments, the numbers are just a little smaller.

 

[sack]

Unbridled Capitalism is just as bad as Socialism! After that, i don't know where to go. :0

 

[PuroEsq]

Are you confused? The tax code only has 9 million words in it.

I am sure XOM has many ways to divert some of the taxes, not that I am complaining about it.

If you are so angry about XOM with such huge profits, maybe you should look at who makes the most $$ per gallon.
The last I heard, the mystery entity has a 5:1 ratio to what XOM earns per gallon.

I believe that would be good ole' Uncle Sam you are referring to ... the biggest profiteer and gouger of the working class ther ever was. I hear the US Government is selling Opus xXx singles or $60.00 :sign:

 

[amateuraficionado]

Big business is not "evil" by any stretch of the imagination. Big business drives the economic engine of the world. Big business employs a lot of "little guys" (both directly and indirectly) and provides huge amounts of money to the government in the form of taxes. That is reality.

Something doesn't have to be evil to just be wrong and to deem it so is dismissive. How in the hell does a company who "generates more than two-thirds of it's earnings from oil and gas production" and experience "production on an oil-equivalent basis down eight percent from a year ago", "shatter its own record for the biggest profit from operations by a U.S. corporation" ? ? ?

I'm for big business, but it doesn't take more than a cursory glance to see something is off here. And to think Exxon Mobil, the company that alone produces 3% of the world's oil, has zero influence over the price of gas at the pump is at best completely and utterly naive!

 

[Rebel Herfer]

The "shame on the oil companies" comes from them getting richer at the expense of the american people.

But, its not just the oil companies.

Profitability
Profit Margin (ttm): 11.59%
Operating Margin (ttm): 17.27%
Management Effectiveness
Return on Assets (ttm): 15.85%
Return on Equity (ttm): 33.33%

Microsoft
Profitability
Profit Margin (ttm): 29.29%
Operating Margin (ttm): 40.70%
Management Effectiveness
Return on Assets (ttm): 22.03%
Return on Equity (ttm): 47.72%

Apple
Profitability
Profit Margin (ttm): 15.37%
Operating Margin (ttm): 19.67%
Management Effectiveness
Return on Assets (ttm): 13.16%
Return on Equity (ttm): 29.06%

Excellent info! To the point.

As for gasoline, don't like the high price, don't use it and use the power of your dollar to buy from companies that don't use it either. Not many huh?? When is the last time a refinery was built in the United States.... something like 30 years ago. We can't complain if we the voters allow a few people to bully companies into not being able to produce enough product. You don't go to a gunfight with a penknife! Build them here, build them now AND Nuke Power can be good for us.

 

[PhatCat]

Approximately 75% of Exxon's net income is earned outside of the US. They make about 4% profit on a gallon of gas. They do not set the price of oil. In my state (MN) we have price controls on gasoline (and they aren't mandatory maximums, but mandatory minimums) so they don't even set the price of gas at their stations here.

It costs Exxon about $11 billion to bring an oil platform online and millions per year to run and maintain that platform. It costs about the same (give or take a billion or two) to build a new refinery and bring it online. Think about that. The numbers in the energy business are just HUGE.

Exxon makes money hand over fist, that's for sure. But their profits are in line with any other business when one looks at the big picture and not just the raw numbers. They provide a product that is in high demand, they're going to make a boatload of money. Most of that money goes to it's shareholders. Almost every person with a 401k or an investment in mutual funds is reaping the rewards of Exxon's profits. In many cases, it may have been the only bright spot in your portfolio over the last quarter.

Big business is not "evil" by any stretch of the imagination. Big business drives the economic engine of the world. Big business employs a lot of "little guys" (both directly and indirectly) and provides huge amounts of money to the government in the form of taxes. That is reality.

The high costs of municipal governments is a completely different story and is related more to those governments spending well beyond their means and counting on bad investments. In most cases local governments are just as greedy, inefficient, and corrupt as the state and the federal governments, the numbers are just a little smaller.

Excellent post Alan.

I've never understood the mandatory minimum price thing. Stupid. Let the market decide.

Also, I'd love to find the figures on how much gas tax is part of the price per gallon we pay at the pump.

 

[LilBastage]

Big business is not "evil" by any stretch of the imagination. Big business drives the economic engine of the world. Big business employs a lot of "little guys" (both directly and indirectly) and provides huge amounts of money to the government in the form of taxes. That is reality.

Something doesn't have to be evil to just be wrong and to deem it so is dismissive. How in the hell does a company who "generates more than two-thirds of it's earnings from oil and gas production" and experience "production on an oil-equivalent basis down eight percent from a year ago", "shatter its own record for the biggest profit from operations by a U.S. corporation" ? ? ?

Say I grow beans. Last year I was able to sell 100 bushels at $78/bushel. I made $7800, a record year for me. This year my crop yield was 92 bushels (8% less than last year), but the price is $109/bushel. I made $10,028. A new record for me.

The prices in that example represent the approximate average price of a barrel of oil over Q3 in 2007 v. Q3 2008. If the price increases 30%, it's quite easy to realize a much larger profit over the same period one year ago even if production is down.

I'm for big business, but it doesn't take more than a cursory glance to see something is off here. And to think Exxon Mobil, the company that alone produces 3% of the world's oil, has zero influence over the price of gas at the pump is at best completely and utterly naive!

In my state (yours may be different) the cost of gas is largely determined by the state government. The refineries (refining 80% Canadian oil) sets the price for delivery to the stations and the stations set the price for their market. According to state law, the station must mark the gas up at least 8 cents over wholesale. 43 cents of every gallon is tax.

Of course Exxon has influence over the price of gas (as does the futures market, strength of the dollar, local markets, refineries, transport costs, station owners, and in many cases the state), but they in no way "set" the price of gas as I stated.

I don't appreciate being called naive. I'm not sure what I said that justifies me being the recipient of your ire. I thought we were having a discussion, not an argument. Just because we may disagree on some things doesn't mean we have to resort to belittling one another.

 

[Mike33]

They also paid $32.51 billion in taxes at an effective rate of about 43% of income.

Actually, that is only what they had incurred, not PAID. They had almost $23 Billion in deferred income taxes on their balance sheet as of Dec. '07, so their effective tax rate (what they actually paid) is around the 10% mark.

So, how does that work? All of the stories I've seen today give the $32.51 billion figure for their quarterly tax bill. There's no mention of 2007.

Well, that is what they have incurred in income taxes. But, that is not what they have to pay. All businesses can and do defer their tax liability, so there is nothing unique or weird about what Exxon does. They will eventually have to pay this year's taxes, but it will be several years down the road and the payments will be spread out and the same goes for all previous and subsequent years. So while it is true that they do have to pay some $32+ billion in taxes, that is misleading as that is not the amount they actually send to Uncle Sam.

XOM's Balance Sheet

Just to be clear, I'm not saying they should or should not pay more taxes and I don't give a damn about their earnings, I was just pointing out that the amount of tax they PAY is quite different from what they INCUR, and that is true for all companies.

Thanks for the clarification.

I suppose much of the taxes are for non-US based operations anyway.

I was simply pointing out that, yeah, they make a boatload of money, but they also pay a lot of taxes. The numbers are absolutely ridiculous if you try to wrap your head around them.

You're right, most of their taxes come from overseas ventures, not gas sold here in the states. As far as them paying a lot of taxes, that is true as well. I think last year it was something like $7 billion they actually paid, which is an amazing amount any way you look at it. Whether it is too high or too low, I'll leave that to others to discuss because it's a pretty political discussion. I will say though, that it is wrong to vilify XOM on the subject of taxes b/c they do pay a sh*tload and don't have a bunch of offshore tax-shelters that a lot of other companies do.

 

[Gator]

like someone said, if you don't like the fact that they make $, then don't use their products. It ain't real complicated. I despise Chavez, so i refuse to buy fuel from Citgo. The power to change things is in OUR hands.

 

[amateuraficionado]

I don't appreciate being called naive. I'm not sure what I said that justifies me being the recipient of your ire. I thought we were having a discussion, not an argument. Just because we may disagree on some things doesn't mean we have to resort to belittling one another.

I apologize Alan if you feel you've been the recipient of ire, of which you haven't as no ire was purported, and I certainly was not belittling you although in retrospect I can see how my comment may have easily been misconstrued as such. Since you've conceded that Exxon Mobil does have influence, to some degree or another, over the price of gas at the pump then clearly you are not naive. Basically "if the shoe fits, etc.", and obviously it does not fit you. My comment was made as a generalization of anyone who may think such. If you are not one who thinks such, then why take it offensively? Long and short, it was not geared directly to you.