News Release

Oil Profits

ExxonMobil announced Monday that in 2005 it made the biggest annual profit on record for a U.S. corporation — $36.13 billion — up 42 percent from the year before. The following analysts are available for interviews:

STEVE KRETZMANN
Executive director of Oil Change International, Kretzmann said today: “While ExxonMobil is posting $10 billion profits in just the last three months, it is gouging each of us at the pump and taking billions more in taxpayer handouts.” The group co-published the recent report “Crude Designs: The Rip-Off of Iraq’s Oil Wealth.”
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ANTONIA JUHASZ
Author of the forthcoming book The Bush Agenda: Invading the World, One Economy at a Time and a visiting scholar at the Institute for Policy Studies, Juhasz said today: “The Bush administration has coddled the oil industry through direct subsidies, tax breaks, reduced regulation, refusal to force the companies to reduce the price of oil at the pump, refusal to implement a windfall profits tax on oil companies, and by waging a war largely for oil. Since the war, ExxonMobil has earned higher year-end profits than any company in world history, while Chevron has surpassed its own 126-year record two years running. Since the war, both companies have been importing more oil from Iraq to the U.S. than at virtually any point in U.S. history. Between 2003 and 2004, the value of U.S. imports of Iraqi oil increased by 86 percent. Oil company profits therefore owe a great deal to Bush administration policy and the myth of dramatically reduced supply from Iraq.”
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TYSON SLOCUM
Acting director of Public Citizen’s Energy Program, Slocum said today: “ExxonMobil’s announcement of $36 billion in profits shows the need for a windfall profits tax in order to re-invest this money into alternatives, such as alternative fuels, sustainable energy, mass transit and home weatherization. When communicating to the general public and lawmakers, oil companies downplay these record profits by calculating profits differently from when they communicate with Wall Street and shareholders. When speaking to lawmakers and the general public, the oil industry highlights the small profit margins (typically around 8 to 10 percent) that are measured by comparing profits with total revenues. But when oil companies communicate with Wall Street and shareholders, they use a different measurement.

“For example, ExxonMobil’s annual report states: ‘ExxonMobil believes that return on average capital employed is the most relevant metric for measuring financial performance in a capital-intensive industry’ such as petroleum. In 2004, ExxonMobil’s global return on average capital employed was 24 percent; its U.S. profit margin for oil drilling was 37 percent and the company’s American refining sector enjoyed a 29 percent profit margin. This shows that the company’s biggest profits came in the American market, and provides sound footing to implement a windfall profits tax.”

BOB WILLIAMS
Williams is director of the Politics of Oil project at the Center for Public Integrity. Their report “Big Oil Protects Its Interests: Industry spends hundreds of millions on lobbying, elections,” released in 2004, found that George W. Bush was the leading political recipient of money from the oil and gas industry.
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For more information, contact at the Institute for Public Accuracy:
Sam Husseini, (202) 347-0020, (202) 421-6858; or David Zupan, (541) 484-9167