HOUSTON (AP) — Exxon Mobil Corp. on Friday posted the largest annual profit by a U.S. company — $40.6 billion — as the world’s biggest publicly traded oil company benefited from historic crude prices at year’s end. Exxon also set a U.S. record for the biggest quarterly profit, posting net income of $11.7 billion for the final three months of 2007, beating its own mark of $10.71 billion in the fourth quarter of 2005. The previous record for annual profit was $39.5 billion, which Exxon Mobil made in 2006. The eye-popping results weren’t a surprise given record prices for a barrel of oil at the end of 2007. For much of the fourth quarter, they hovered around $90 a barrel, more than 50 percent higher than a year ago. Crude prices reached an all-time trading high of $100.09 on Jan. 3 but have fallen about 10 percent since.
I’m all for companies making a reasonable profit. That’s how capitalism is supposed to work: sell a product or a service that people need at a fair price, and if you’re good at what you do, you’ll be in good shape. What happens, though, when a market is so thoroughly out of whack that a company is able to make obscene profits simply by sitting back and watching the price go through the roof? Not so very long ago, we were paying about a dollar a gallon for gasoline. Of course, I understand that the international oil market is extremely volatile and prone to overreact to political problems and pressures in ways that might not impact other commodities. You can’t tell me, though, that Exxon Mobil has posted a record profit simply by cutting costs and increasing efficiencies. No, Exxon Mobil has simply been the beneficiary of an oil market that is completely out of whack. It’s not as if their cost of production has tripled or quadrupled, which might help to explain gas prices hovering around $3.00 and in some places $4.00. Exxon Mobil has simply garnered a windfall from oil prices that have been hovering around $100/barrel. All they’ve really had to do is sick back and watch the money roll in.
The problem with this scenario is that Exxon Mobil- and other oil companies- are profiting at the expense of everyday Americans. While I’m all for letting the free market work things out, it’s difficult to justify, much less stomach, a scenario in which ever-increasing amounts of our hard-earned dollars end up in Lee Raymond’s pocket.
How much of Exxon Mobil’s windfall is from just plain greed? That’s hard to say, but it seems to me that we’ve reached the point where something needs to be done. I’m not here to accuse Exxon Mobil of being dishonest or of gouging Americans, because I don’t know that to be the case. Nonetheless, the end result is that same. Everyday Americans, especially those who drive a great deal as part of their job, are being hit where it hurts- in their pocketbooks. That money has contributed to Exxon Mobil’s $40.6 BILLION quarterly profit, and given the state of our economy, that’s simply obscene and unjustifiable. Fair profit, yes. Large profits, perhaps. Obscene and unreasonable profits? Only if you believe that bleeding the middle class is a good thing. Market forces are one thing; unchecked greed is quite another.
Isn’t it about time that Americans got a break? I’m not necessarily saying that regulating the profits of oil companies is a good thing, but is a quarterly profit of $40.6 BILLION a good thing? Especially when Americans continue to be squeezed by ever-increasing gas prices? Something needs to give, and it would be nice to think that our elected representatives would have the cojones to take positive action to reign in this sort of unchecked greed.
Yeah, right; like that’s ever going to happen….
In the meantime, we’re expected to bend over and grab our ankles while Lee Raymond gets another Gulfstream IV. Greed is good, no?
