Exxon Announces Mega Profits. Consumers Go Broke at Pump

by Mike Hall, Apr 27, 2006

We’ve all stood there by the gas pump, silently, and sometimes not so silently, fuming as the numbers on the dollar counter roll by faster and faster—$5–$10­­–$20–$60. But the gallon counter only pokes along. If you’re lucky, your 60 bucks bought you 20 gallons of regular. Next week, who knows?

While working families are scrambling for ways to pay at the pump, the head honchos at Exxon Mobil are pulling in so much profit they could buy 2.8 billion gallons (at $3 a gallon) of their own product. The petroleum giant’s $8.4 billion quarterly profit follows it’s record-breaking $10.7 billion profit from 2005’s last quarter—the biggest corporate quarterly profit recorded by any corporation in U.S. history.

Oh, one more thing. In 2005, the company made $36.1 billion. That’s profit…what’s left over after expenses…taxes (more on that later)…lobbying…and CEO pay and perks.

Those pay and perks for CEO Lee Raymond would buy 12.6 million gallons of gasoline at the current $3 a gallon exchange rate—$38 million. Raymond retired after 2005 with the tough choice that all lottery winners face—annual payments or a lump sum. For Raymond that was either $6.5 million a year or a lump sum of $81.3 million. He won’t have to worry about filling up his RV.

The other big oil companies also have been raking in massive gas-pump profits and are expected to show similar first quarter profits this year. In fact, the absurd (or obscene if your prefer) profit windfall has moved Congress—even corporate loyal Republicans…even President Bush—to action, or at least talk of action.

Oil companies enjoy a myriad of tax breaks—some created in last year’s controversial energy bill, that Bush pushed and signed.

The New York Times reports:

Citing record industry profits and huge executive pay packages, the top Republican and top Democrat on the Senate Finance Committee asked the Internal Revenue Service to turn over tax returns for the nation’s 15 biggest oil and gas companies….

Democrats called for a 60-day halt on collecting federal gasoline taxes, which are 18.4 cents a gallon, but they were openly split about the more radical step of imposing a windfall profits tax on major oil companies. For their part, many Republicans are torn between wanting to show their sympathy for consumers and maintaining their longstanding support for the oil industry.

Bush suddenly has taken up the mantle of a consumer advocate, talking about possible price gouging at the pump, putting a temporary halt on filling the nation’s Strategic Petroleum Reserve. He’s even become as green as Kermit the Frog by calling for new alternative and renewable energy resources.

The Washington Post called Bush’s new strategies “dubious,” especially his sudden environmental conversion:

The president has, of course, had plenty of opportunities over the past five years to shape a more rational energy policy, one that would have provided incentives to move away from oil and toward other energy sources. He could have lobbied harder to remove the oil industry tax benefits from the energy bill he signed. He could have insisted that Congress add more tax breaks for hybrid cars, as he now says he wishes it had done. He could lift the tariffs on Brazilian ethanol, which would help address some of the ethanol shortages across the country.

With summer driving season almost here—when gas prices always climb—don’t expect much of a break soon. While the rest of us will be checking bus and subway schedules, strategically planning every grocery and errand run and trying to figure out if we really could bike to work—don’t expect to see President Bush car-pooling with Cheney, Rumsfeld and Rove anytime soon.

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