Oil nearing $100/barrel, but Exxon's profits fall? What the hell is going on?

[northernsoul]

http://www.portfolio.com/news-markets/top-5/2007/11/01/100-a-Barrel-Here-We-Come

Worries over supplies were stoked on Wednesday after the Energy Department reported that U.S. inventories declined by 3.9 million barrels of oil last week.

With the recent rise in prices, "we are stepping into an unknown area," Ken Hasegawa, a broker at Fimat Japan, told the BBC. "Nobody wants to sell, given the fear of a further rise."

Higher oil prices must be good news for ExxonMobil, the world's biggest publicly held oil company, right?

The surge in oil turns out to be a double-edged sword. The margins in the company's business in refining gasoline and chemicals have been severely pressured by the higher costs for crude oil.

Exxon reported today that it earned $9.4 billion, or $1.70 per share, in the third quarter, compared with $10.5 billion, or $1.77 per share, in the quarter a year earlier. Revenue rose 2.8 percent, to $102.3 billion.

Now, I'm not a dedicated peak-oiler (yet), but soemthing seems to be fundamentally wrong when oil prices are so high not even Exxon can make money.

[niyad]

1. you forget that exxon is pleading with the supremes to have their fine overturned in the

exxon valdez calamity. the "fine is toooooooo big"

[northernsoul]

3. Trust me, I'm watching that one very closely

I'm very concerned that the Roberts court is going to eviscerate punitive damages, which is one of the few tools we have left for curbing massive corporate malfeasance.

[Squatch]

2. Isn't that price in the primary market?

Cost of oil to Exxon has increased to 100$ but retail prices (at least in my neck of the woods) hasn't changed.

Exxon isn't selling crude oil at 100$ then buying it back to refine it.

[madinmaryland]

10. Retail price here is up $0.15 in two weeks.

I expect to see $3.40 by the end of the year.

[tridim]

4. The only earned $9.4 billion this quarter?

How in the world are their poor executives going to be able to make their house payments with that kind of scratch? :eyes:

[A HERETIC I AM]

5. They're making money, just not as much as before

From the article you linked;

Exxon reported today that it earned $9.4 billion, or $1.70 per share, in the third quarter, compared with $10.5 billion, or $1.77 per share, in the quarter a year earlier. Revenue rose 2.8 percent, to $102.3 billion.

During the quarter, as production for the summer driving season eased, retail gasoline prices in the United States fell even as crude futures rose. Profit at the company's refining and fuel-marketing business fell 27 percent from the quarter a year ago.

Bold emphasis mine.

They made money, it was just less than the street expected.

[raccoon]

11. Thanks for your post. nt

[sicksicksick_N_tired]

6. They'd like you to believe its peak oil and that they have lost profits.

Neither is true.

They are simply trying to justify another day to screw you.

[BrklynLib at work]

7. I am sure their accountants can make the books say anything they want them to say.....

If it looks better for their profits to be down, their profits will be down...

[davekriss]

8. Earning $9.4 billion in a quarter...

...is making money in my neck of the woods. (Just sayin'...)

[northernsoul]

14. correct, for me to say that they are "losing" money was a mis-statement

More accurately, their profit margins are shrinking.

[madrchsod]

9. in the coming years big oil will become employees for the

countries that have oil and gas.an example is the caspian sea basin countries are controlling the oil and big oil is being hired to build it and manage it. that`s why bp is advertising beyond oil..they are diversifying away from oil.

[Double T]

12. It is election time and the oil companies have held back on consumer........

energy price increases while the price of their base commodity has skyrocketed. Wait until AFTER the elections as consumer energy prices will follow the price of oil into the stratosphere; the economic future is ugly because of wall street's and corporate anti-america's insatiable greed.

[mmonk]

13. When refining costs go up

it becomes more of a problem. It's a small move towards decline. Probably means the grade isn't as good. The other huge increases have come from supply manipulation.