Exxon defends $11B profit as gas prices soar

Associated Press

NEW YORK

Exxon made almost $11 billion and practically apologized for it.

Sensing public outrage over gasoline prices that have topped $4 in some states, the company struck a defensive posture Thursday after posting some of its best quarterly financial results ever.

Exxon said it had no control over high oil prices. It said it’s one of the biggest taxpayers in the United States. It cast federal subsidies as “legitimate tax provisions” that keep jobs at home, and cast itself as a victim of Washington scapegoating.

“They feel they have to demonize our industry,” said Ken Cohen, Exxon’s vice president for public affairs.

What’s more, the company argued, it doesn’t even make that much money selling gasoline.

Exxon’s profit of $10.65 billion for the first quarter was its highest since it made $14.83 billion in the third quarter of 2008, a record for a publicly traded company. That also was a time of $4-plus gas.

The first-quarter results also were the best among the big oil companies, which have reported improved results this week.

As oil-company profits approach levels of three years ago, when gas prices last spiked in the United States, the industry is fighting a renewed push from President Barack Obama and Democrats to end its $4 billion a year in taxpayer subsidies.

This week, the industry’s lobbying group touted the 9.2 million jobs that depend on Big Oil and rolled out a study showing that oil and gas stocks are excellent investments for public- pension plans.

Before it even came out with the quarterly results, Exxon pleaded its case on a company blog, saying it was not to blame for high gas prices.

Then Cohen took an unusual step and spoke to reporters after Exxon reported the big profits. He said Exxon pays more taxes than any other company in the Standard & Poor’s 500 index — $59 billion in the United States over the past five years.

After taxes, the company earned $41 billion from U.S. operations during that period.

Drivers and politicians still may need some convincing. Gas costs more than $4 a gallon in eight states and the District of Columbia. The national average is $3.89 and has risen for 37-straight days.

At a time when most people aren’t getting raises, gas has risen 81 cents a gallon this year. High gas prices ate into the nation’s overall economic growth in the first three months of this year. The economy grew at a 1.8 percent annual rate, slower than the 3.1 percent at the end of last year.

Cohen has a point that Exxon doesn’t control the price of oil or gasoline. Oil is traded around the world on public exchanges, and experts point out that the world is consuming more oil now than it did before the recession, raising demand. When oil prices go up at the exchange, Exxon sells oil for more money to refiners and other buyers.

Exxon noted that only 6 percent of its profit came from refining and selling gas in the United States. Other parts of its business, such as selling oil and natural gas overseas, accounted for much more.

Argus Research analyst Phil Weiss finds that argument reasonable. But oil companies will struggle to win over people as long as they’re making billions of dollars every quarter, he said.