Exxon
tries to head off profits backlash
By Sheila Mcnulty
Financial Times
HOUSTON
Petroleumworld.com 01 31 06
ExxonMobil
is to release its fourth-quarter results on Monday. And Jaime
Spellings, ExxonMobil's general manager of corporate planning,
is trying to put them in perspective.
He
suggests that the public compare the oil company’s figures
against those for other liquids, such as Coca-Cola. In the third
quarter of last year, for example, Exxon earned 9.8 cents per
dollar of sales, while Coca Cola earned 21.2 cents per dollar
of sales. In fact, he adds, most major oil companies had income
well below many other large corporations.
Mr
Spellings’s presentation is aimed at heading off another
round of the vitriol that emerged when Exxon, the world's biggest
publicly listed oil and gas company, reported reported nearly
$10bn in third-quarter profit, up 75 per cent from the year-earlier
period. Then, amid $3 per gallon gasoline and rising winter fuel
prices, Congress called the major oil and gas companies to hearings
in Washington to face questioning on what many suspected was profiteering
at the public's expense.
The
US Senate responded with an estimated $4.3bn tax increase on the
inventories of the biggest oil companies, and limited to smaller
companies the tax break for oil exploration passed in the energy
bill this past summer. That legislation has not made it all the
way through Congress, however, and the major oil companies do
not think it should. “ExxonMobil is a net buyer of crude
oil and is subject to the same crude oil prices that affect governments,
businesses and consumers alike,” Mr Spellings told the Financial
Times.
Robin
West, chairman of PFC Energy, the consultancy, backs him up. “Sensible
politicians have to recognise the majors are no longer price makers
but price takers.” While those in the industry realise the
oil companies cannot be held solely responsible for high fuel
prices, it does not mean the public will not blame Exxon, and
its peers, with the profits being reported for the fourth quarter
of last year. Last week, Chevron, the US’s second-largest
major, reported a 21 per cent rise for the quarter; ConocoPhillips,
the US’s third-largest, reported a 51 per cent rise; and
Marathon, the fourth-largest US major, reported nearly tripling
its profits.
Chevron,
like Exxon, sought to head off any controversy, issuing an information
sheet ahead of the reporting season. Industry analysts do not
believe the efforts by the majors to head off criticism will end
the controversy. Amy Myers Jaffe, energy expert at Rice University's
Baker Institute for Public Policy, says energy security, in the
sense of affordable, obtainable energy, remains one of the top
five issues for the public. Yet, she says, the focus of those
involved is on deflecting blame instead of working to prevent
a repeat of the shortages and record prices of the past year.
FT
01/30/06
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