Exxon Mobil Reaps Record Profits
DEBBIE ELLIOTT, host:
In a week when the Congress was debating raising the minimum wage by a couple of bucks to $7.25 an hour, it may have been hard to wrap your brain around this figure, $4.5 million an hour. That's how much Exxon Mobil made last year when it topped its own record for the biggest annual profit for a U.S. company. NPR's Scott Horsely often soars into the financial stratosphere for his reporting. So we've invited him in to talk about Exxon and other corporate developments over the past weeks. Scott, hello.
SCOTT HORSLEY: Great to be with you, Debbie.
ELLIOTT: So Exxon wasn't only the oil company to rake in big profits in this year of record-high oil prices, but $4.5 million an hour? How do you make that kind of money?
HORSLEY: Sounds pretty good, doesn't it? You're right. Chevron, Conoco Phillips, Royal Dutch Shell, they all earned record profits in 2006. But Exxon's the biggest of the oil majors and it had the biggest profits of all, $39.5 billion for the year. Exxon was really clicking on all cylinders in 2006 and the fuel driving their engine was crude oil. You'll remember that last summer, crude oil hit $77 a barrel and Exxon has a lot of barrels of oil to sell. Since last summer, by the way, crude oil prices have fallen back a bit into the high 50s. They briefly dipped below $50 a barrel last month. And if you look closely at the profits of Exxon and the other majors, they were down a bit. Don't cry for Exxon, though. A down quarter for them meant they only earned $10.25 billion.
ELLIOTT: So there's likely to be some political fallout from these figures.
HORSLEY: Oh, you bet. Just as sure as a cold snap dries up the price of heating oil, when you see big profits like this in the headlines, you know lawmakers in Washington are gonna raised the temperature. This past week we heard Massachusetts Congressman Ed Markey calling the profits outlandish. House lawmakers voted in January to raise taxes on oil companies. One thing you are not hearing lawmakers talk about is a tax on gasoline, even though, most economist say, that would help curb our appetite for gas, and that appetite is ultimately what's driving these big profits.
I think you will see Exxon lobbying against greenhouse gases before you'll see lawmakers in Washington pass a tax on gasoline. But in the meantime, consumers could do effectively the same thing by simply driving less or, when it comes time to buying your next car, think about getting a car with better gas mileage.
ELLIOTT: You know, car buyers have been showing more interest in fuel efficiency and even alternative cars. Is this the reason that there was more bad news this past week for Ford?
HORSLEY: Well, yeah, Ford and other automakers came out with their sales figures on Thursday. And Ford sales were down in January 19 percent. That dropped the company into fourth place, trailing not only GM, but also Toyota and Daimler-Chrysler. Light truck sales, which include SUVs, were down by about 10 percent at Ford. And sales of the company's S-series pickups were down by 15 percent. That's partly because those big trucks don't get great gas mileage. Ford also blames a slowdown in new home construction, a reminder that some of the folks who buy pickup trucks actually use them for, you know, picking up things like plywood and sheet rock and construction materials.
ELLIOTT: NPR's Scott Horsley, thanks for updating us on this week's business news.
HORSLEY: Debbie, one other story that's - I'd like to mention, since this is Super Bowl Sunday. For the first time in nearly a century, California has opened its market to avocados from Mexico. We grow a lot of avocados here in Southern California and the local growers fought hard back in the 1990s to keep competing Mexican fruit out of the U.S. guacamole bowl. But over the last decade, the Mexican fruit made inroads in the U.S. market, and last Thursday it was allowed for the first time here in California. And this comes at a good time for consumers because a chunk of our California crop was wiped out last month by that freeze. At the same time, though, the consumers who were hoping for much cheaper avocados are bound to be disappointed. Mexican growers have been careful not to flood the market. So the dip this weekend at the Super Bowl party did not come with a dip in prices.
ELLIOTT: Making it easy for you there, Scott. Thanks so much. Enjoy the game.
HORSLEY: Thank you. Good to be with you. Transcript provided by NPR, Copyright NPR.