The world’s largest publicly traded company said Thursday that higher oil prices boosted profits 69 percent from a year ago. The result was Exxon’s best since earning a record $14.83 billion in 2008’s third quarter.
Wall Street had been expecting sharply higher earnings for oil companies. Oil prices rose 17 percent in the quarter. But huge oil profits will aggravate drivers with gasoline prices averaging $3.89 per gallon nationally. President Barack Obama wants to cut into some of those earnings by eliminating $4 billion in taxpayer subsidies for oil companies.
Exxon is taking steps to dilute any potential furor over the results. On a company blog Wednesday, the company said that it has little control over the price of oil, which is now near $113 per barrel. It also noted that less than 3 cents of every dollar it earns comes from the sale of gasoline and diesel fuel.
That may not appease many motorists and politicians, however. The price of a gallon of gas is already above $4 in 8 states and the District of Columbia. And on Thursday, the Commerce Department said economic growth slowed sharply in the first quarter, partly because of high gas prices.
On the blog, Ken Cohen, Exxon Mobil Corp.’s vice president of public and government affairs, said the company was anticipating “the inevitable headlines and sound bites about high gasoline prices and what to do about them” after the earnings were reported.
Exxon’s results followed strong profit gains by other oil companies.
Europe’s largest oil company, Royal Dutch Shell PLC, reported $8.78 billion in first-quarter profits, up 60 percent from a year ago. BP PLC’s quarterly earnings rose 16 percent to $7.2 billion. ConocoPhillips said net income grew 43 percent to $3 billion and Occidental Petroleum Corp. said earnings climbed 46 percent to $1.55 billion.
Chevron Corp., the second-biggest U.S. oil company, is expected Friday to report a 25 percent increase to $5.69 billion.
Argus Research analyst Phil Weiss said oil companies would struggle to win over people as long as they’re making billions of dollars every quarter, even though he thinks the industry makes a reasonable argument.
“They really don’t have a lot of control” over the price of gasoline, Weiss said. “But then they get these high profits and people get upset. That’s what politicians respond to.”
Exxon reported net income of $10.65 billion, or $2.14 per share, for the first three months of the year. That compares with $6.3 billion, or $1.33 per share a year ago. Revenue increased 26 percent to $114 billion.
The results beat Wall Street estimates of $2.04 per share on sales of $112.6 billion, according to FactSet. Shares fell for Exxon and other oil companies, however, on expectations for a continued drop in U.S. gasoline demand. On Wednesday, the Department of Energy said demand for gasoline over the past four weeks was 1.6 percent lower than a year earlier.
Exxon shares lost 44 cents to $87.34 in morning trading.
Exxon increased earnings even though it produced less oil and natural gas liquids. Benchmark crude prices rose 20 percent from a year ago.
The company has increasingly focused on producing natural gas. Exxon expects natural gas to displace coal as the second most important fuel source within the next decade. Last year it acquired XTO Energy to become the largest U.S. natural gas producer.
Exxon’s natural gas output rose 24 percent in the quarter, but prices declined as other companies followed its lead and rushed to develop underground shale gas deposits in North America. Natural gas prices fell nearly 16 percent from a year ago.
Earnings grew across the company’s business segments. Income from its exploration and production business gained 49 percent to $8.7 billion while the company’s downstream business, which includes refineries, posted a huge 30-fold jump to more than $1.1 billion.