The National Center Blog on Exxonmobil

Click on the title for the entire article and for links to the bloggers who participated in the conference call, and posted afterwards.

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ExxonMobil on Gas Prices:
We Couldn't Manipulate the Price Even If We Wanted To

On behalf of this blog, The National Center's Peyton Knight participated in a blogger conference call this afternoon with ExxonMobil Vice President Ken Cohen. The following is Peyton's report:
Along with eight representatives from various other weblogs, I participated in a "blogger conference call" Wednesday afternoon with ExxonMobil Vice President of Public Affairs Ken Cohen. We discussed issues surrounding gas prices and his company's record profits.

Cohen says that the current negative press surrounding his company's profits has more to do with a lack of understanding of the oil industry than anything else. In this regard, he says, ExxonMobil needs to do a better job communicating with the public and helping folks understand all of the forces at play in the oil business.

According to Mr. Cohen, there are "three data points" that need to be connected. "First, we all have to have a common understanding of what the facts are... then, what are the policy options, and what is the cost-benefit ratio? And right now we don't have a good common understanding of what the facts are."

There are currently about 170,000 gasoline service stations in the United States, and, according to Cohen, ExxonMobil owns and operates less than 1,000 of those.

"We control the pricing at less than a thousand gasoline stations in the United States... We have about seven percent of global refining capacity and 12 percent in the United States. That's not market power." He notes that ExxonMobil couldn't manipulate the price of gasoline even if it wanted to.

Cohen acknowledges that "right now, [profit] margins are good," but says, "it's a cyclical business."

Even so, I believe many people would be surprised to learn that as good as ExxonMobil's profit margins are, it's government that is reaping the biggest "windfall" in this time of higher gas prices.

According to Mr. Cohen, in the first quarter of 2006, ExxonMobil made $8.4 billion in total profits. Profits in the U.S. accounted for $2.3 billion of that total. And what did ExxonMobil pay in total government taxes in the U.S. in this first quarter? $3.7 billion. The company paid $1.4 billion more in taxes than it took in profits.

In fact, Mr. Cohen says, from 2001 to 2005, ExxonMobil's total U.S. tax bill was $57.1 billion, and its total earnings in the country were $34.9 billion. This means that over the most recent five-year period, the company paid $22.2 billion more in taxes than it earned in profits.

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We must be very careful of what is reported in the Main StreamLegacy Media. With the advent of the Internet, any citizen who has the patience can, and will, check the sources and the bias of the PropagandistsReporters.
This whole issue on Oil Profits, I believe, swirls around two critical things. All else is secondary. They are:

1. Profit, and


2. Profit Margin



Profit




The PropagandistsReporters would have you believe that profits are, well, evil. That is because the aforementioned do not believe in the Capitalist system, and wish that we were a wee bit more socialist in our form of government.
A windfall tax on Big Oil is a back-door way of getting Price Controls. We all know that price controls do not work, and send a violent shock throughout the economy. (I think perhaps they want this.)



Profit Margin




How big or little your marin of profit are much more important than how much it is.

I was shocked to learn that the margin of profit was around ten percent or less. Abusiness, no matter its size, cannot stay in business forever under those circumstances.
What most people don't realize is the price is what the market will bear, if it is too much, simply don't buy it. Convert your automobile to run on vegetable oil, reaslizing that if many of us do this, the price of vegetable oil soon rises to what gasoline was. The same applies to The Corn God of Ethanol.