HOUSTON — Exxon Mobil, aided by strong energy prices, said yesterday that
it had $36 billion in annual income last year, a record for profits among U.S. companies. But while most companies would
be proud to trumpet record profits, Exxon Mobil did everything it could to play down the news.
For Exxon, which also handily widened its lead over Wal-Mart as the company with the most revenue in the nation, the
report was an embarrassment of riches. Anxious about criticism of the results, executives began laying the groundwork
months ago to try to prevent a political reaction against the company and the energy industry.
For example, Exxon bought advertisements in leading newspapers arguing that profit margins in the industry lagged
far behind those of other industries, like Pharmaceuticals and banks. [This is
because they are selling a commodity for which their contribution and risk is significantly less.--jk]
Still, growing oil profits are generating new scrutiny of the industry, with legislators
and taxpayer groups expressing concern over Big Oil's good fortune, as soaring energy prices put increasing pressure
on consumers. "If it's Google, no one asks
about the profits because they're too busy buying the stock," said Amy Myers Jaffe, associate director of the energy program
at Rice University. "Exxon is different. We have these emotional feelings related to gasoline because there's no readily available
Exxon's results yesterday caused jaws to drop; by some measures, the company became
richer than some of the pivotal oil-producing nations. Exxon reported a 27 percent surge in profits for
the fourth quarter as elevated fuel prices gave rise to full-year profits in 2005 of $36.13 billion on revenue of $371 billion. Exxon said its overall profits climbed more than 40 percent
last year, while its tax bill rose only 14 percent.
"It's outrageous for Big Oil to be making these kinds of profits," said Rep.
Gasoline prices at the pump are rising again, with the average price of regular
unleaded gasoline up nearly 7 percent from a month ago, to $2.34 a gallon, according to AAA, the automobile club.
Last fall, the
Republican-controlled Senate passed a bill to extend about $60 billion in tax cuts over the next five years. The measure is unlikely to survive. President Bush has threatened to veto the tax
bill if it includes the tax on oil companies, and House Republicans included no comparable measure in their own
Another measure approved in the Senate would effectively remove the foreign tax credit
that the nation's three largest oil companies, Exxon, Chevron and ConocoPhillips, receive for taxes paid in other countries.
Most energy analysts do not see the measures winning approval in the House, but Exxon executives remain concerned.
"We take these issues very seriously," said Mark Boud-reaux, a company spokesman.
"We realized that we needed to do a better job of explaining how the industry works."
To make its case, the company organized slide shows for groups of journalists
ahead of the report, explaining that its operations accounted for only 3
percent of global oil production.
Republican lawmakers were on the defensive yesterday. Not only are they under pressure
from party leaders and from the White House to kill the proposed tax on oil companies, but they also inserted more than $2 billion of additional tax break for oil and gas companies in the energy bill that Congress passed in November.
Boudreaux, the Exxon spokesman, pharmaceutical companies earned 18.6 cents for each dollar of sales in the third quarter
of 2005, and banks 18 cents, compared with 8.2 cents at oil and natural gas companies.
Still, the company's profits stand out by almost every measure. Exxon's profit last year of $36.1
billion easily surpassed the earlier mark of $25.3 billion, which Exxon had set in 2004, according to Howard Silverblatt,
senior index analyst at Standard & Poor's in New York. Only Ford Motor Co.'s profit of $22 billion in 1998 comes close
to Exxon's success in recent memory, Silverblatt said. Exxon's profits climbed
last year thanks largely to higher prices for oil and natural gas, but also for other reasons, including higher margins at its refineries, the start of oil production at a project on Sakhalin Island in Russia's Far East, and a gain from the sale of
a stake in Sinopec, an energy concern controlled by China's government..
Sierra club has a short musical cartoon on how Exxon Corp. puts profits
for environment at http://www.sierraclubplus.org/exxposeexxon/