4.27.11 - Earnings-by-Industry - FEATURED

Gas prices and industry earnings: A few things to think about the next time you fill up

Here’s a simple fact of economics that’s getting everyone in Washington pretty excited this week: When prices increase for a commodity like oil, companies that produce and sell that commodity earn more money.

So, as we get ready to release our quarterly earnings on Thursday, here are a few things to consider when you see the inevitable headlines and sound bites about high gasoline prices and what to do about them.  These facts probably won’t make anyone feel better about paying more for gasoline – and of course price increases can have a very real impact on family budgets – but I do think it’s important that we at least have an honest discussion about what’s behind recent energy price increases.

Less than 3 percent of ExxonMobil’s earnings are from U.S. gasoline sales
ExxonMobil’s earnings are from operations in more than 100 countries around the world. The part of the business that refines and sells gasoline and diesel in the United States represents less than 3 percent – or 3 cents on the dollar – of our total earnings. For every gallon of gasoline, diesel or finished products we manufactured and sold in the United States in the last three months of 2010, we earned a little more than 2 cents per gallon. That’s not a typo. Two cents.

Oil is a commodity; prices are set in the global market  
Crude oil is a commodity, and like all other commodities – such as corn, wheat or sugar – the price is determined by buyers and sellers in a global market. Buyers are paying more for oil because the global economy is strengthening, and demand for products derived from crude oil is on the rise. Political instability in some oil-producing nations is also contributing to uncertainty about future supply. Oil markets are well supplied today, but uncertainty about tomorrow’s supply is reflected in prices today. Finally, the U.S. dollar is at a three-year low against other currencies – accelerated last week after a warning by Standard & Poor’s about the country’s $14.3 trillion debt and relative economic weakness. The weaker the dollar, the less it will buy – meaning more is spent for the same amount of a commodity, whether it’s crude oil or nearly all of the commodities in the chart at right.

ExxonMobil doesn’t set oil prices
Take a look at the chart at right. ExxonMobil owns less than 1 percent of the world’s oil reserves, and it produces less than 3 percent of the world’s daily oil supply, so it’s really not credible to suggest that we are responsible for world oil prices. ExxonMobil actually buys more crude oil than we produce. Last year, we spent $198 billion on crude oil, which we used to make refined products such as gasoline.

 
What goes into the price of gasoline
The main component of the price at the pump is the cost of a barrel of crude oil. Another major component of the price of gas is state and federal taxes, which range from a high of 66 cents per gallon in California to a low of 26 cents per gallon in Alaska, according to January 2011 data. How are pump prices set at Exxon and Mobil stations? We don’t own 95 percent of them, and therefore we don’t set the price. Local stations are often owned by a businessman or businesswoman in your community, and they set their own prices based on local market conditions.

 

ExxonMobil’s earnings are in line with the industry average
In 2010, ExxonMobil made less than 8 cents for every dollar of revenue from all of our businesses around the world. That’s less than half of companies selling pharmaceuticals, beverages, tobacco and computers, just to name a few. On a dollar-for-dollar basis, our earnings, and those of the U.S. oil and gas industry at large, are generally in line with the average earnings of all U.S. industries.

 

ExxonMobil is one of the largest taxpayers in the United States
Last year, our total taxes and duties to the U.S. government topped $9.8 billion, which includes an income tax expense of $1.6 billion. Over the past five years, we incurred a total U.S. tax expense of almost $59 billion, which is $18 billion more than we earned in the United States during the same period. Critics often try to ignore these facts by saying the oil and gas industry receives “subsidies.” But what they really mean is that they want to increase our taxes by taking away long-standing deductions for our industry while leaving these same deductions in place for other sectors of the economy.

ExxonMobil invests in new energy supplies
ExxonMobil’s investments to find and produce new supplies of oil and natural gas totaled $32 billion in 2010 – exceeding our earnings by more than $1.7 billion. From 2011 to 2015, we plan to invest $33 billion to $37 billion annually in new energy supplies. In the past 25 years, we’ve invested almost $400 billion in energy projects – an amount that nearly matches our income during that time.

 

ExxonMobil earnings go to our shareholders
Once we’ve paid our expenses, paid our taxes and funded new projects, we turn the rest of the money over to our shareholders. Last year we distributed more than $19 billion to shareholders through dividends and share purchases.
If you’re living in the United States – where some 85 percent of our shareholders live – chances are you’re benefiting in some direct or indirect way from our earnings even if you don’t own our stock. For example, if you live in any of the following states, your public sector or teachers retirement funds hold shares in ExxonMobil: New York, California, Texas, Ohio, Colorado, Alabama, Tennessee, Alaska, Michigan, Pennsylvania, Kentucky and Utah. Many more retirement funds, 401-Ks and IRAs hold shares in ExxonMobil and other major publicly traded oil companies – including those for government workers and members of Congress.


103 Comments

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  1. Barrel Full says:

    ……Oil markets are well supplied today, but uncertainty about tomorrow’s supply is reflected in prices today…….

    It is very important that the uncertainty is reflected in today’s prices, because that sends a signal to oil companies to invest. What so many of the critics don’t seem to want to understand is that the lower prices are, the less investment will be made, and future prices will be higher.

  2. Mark McGwire says:

    Why isn’t the price at the pump for Gasoline regulated like the rate I pay for Natural Gas or the electricity I use in my home? Utility commissions oversee rate increases for Nat. Gas and Electricity because consumers are subject to Monopolies in the marketplace. In order to protect consumers commissions oversee utilities and allow suppliers a fair profit. This system puts sanity in the pricing and eliminates the wide swings in prices we see in the pricing of Gasoline. I know what you are thinking and I defined the utility companies supplying your residence or business as a Monopoly and the Oil companmies will say they are not a Monopoly and their is freedom to choose in the market. There are many different brands of Gasoline to choose from right? Guess what though. No matter what brand you choose it’s all the same stuff. Every gallon of gas sold in my city no matter what brand is emblazoned acros the pump comes from the same oil and same refinery. On toppof that there is no competition to set the price. They all sell the same product for the same price. Monopoly! Gasoline prices need to be regulated to allow for a fair profit. Gasoline profit needs to be based on a flat profit per gallon no matter what the cost of a barrel of oil happens to be inflated to. Can we have a flat profit rather than a % which inflates profites as the price of oil goes up. Can we leave a few crumbs in the pockets of consumers so they can afford a decent standard of living. Exxon Mobil give us a break and change your profit model from… read more »

    …a percentage to a flat amount which reflects your actual refining and delivery costs. We can do this the hard way or the easy way it’s up to you. Gov’t regulation or Private fiscal responsibility.

    Thanks for listening.

    • Oil Co. Shill says:

      Thanks for reading… or for not reading. Exxon makes 2 cents, on average, on every gallon of gas, how’s that for a “flat profit”? You don’t even have the first clue as to how to define a monopoly, at least you could have given us some nonsense about “barriers to entry.” Please, re-read the blog post, then try to make some sense of your rambling comment.

      • Mark McGwire says:

        Bull. Then you must have been losing money when gas prices were at $2.50/gal right?

        • bill hill says:

          Mark,
          Crude prices are a huge cost of producing gasoline and EOM buys a ton of it to keep their refineries busy. So when crude prices go up the refining side suffers but the exploration side makes more money. Any way we are talking margin here not price.

      • George Andreadis says:

        Double bull, I read it as well, you must be selling an enormous amount of gas at $0.02 profit per gallon to make the billions of profit per quarter.

        I have a bridge I want to sell, are you interested?

        • Paul Jones says:

          Again… did you read the article? The VERY FIRST BOLD LINE STATES… “Less than 3 percent of ExxonMobil’s earnings are from U.S. gasoline sales”
          OK. Maybe you did read, you just can’t comprehend.
          Where is that bridge?

        • Marc Stanford says:

          George, your double bull might hold water IF gasoline were the only product sold by Exxon. Seriously, do some research before posting a simpleton statement like that…

        • Bob Michaud says:

          OK George – here’s the story. We use a lot of gas for our cars in this country. So! Yes! We do use an enormous amount of gas. Want to complain about something – how about the taxes on gas! Go home! Walk, by the way.

    • Mitch Kennedy says:

      I have a couple issues with your post…

      1. Pricing based on a flat fee per gallon sold is good for the consumer when the price is high. When the price is low however it doesn’t work as well. Secondly, a set revenue schedule will eventually erode efficiency and prices will go up as a result. It will take time but certainly happen.

      2. Fiscal responsibilities…they make slightly over $0.02 per gallon sold….when the prices are at an all time high. Based on prices in my neighborhood that is less 1/2 of 1% of the cost of a gallon of gas. So cut that in half…who cares…a cost of a gallon of gas is now $0.01 less. I don’t believe $3.99 instead of $4.00 per gallon is going to make much difference to people.

      • Mark McGwire says:

        If you believe that they are only making .02/gal then they were losing money on every gal sold until only recently. If you bilieve this nonsense then I would like to sell you some real estate in Afghanistan.

        • Paul Jones says:

          Same thing I posted to George, above…
          Again… did you read the article? The VERY FIRST BOLD LINE STATES… “Less than 3 percent of ExxonMobil’s earnings are from U.S. gasoline sales”
          OK. Maybe you did read, you just can’t comprehend.

    • Harold Hunt says:

      Oil is regulated by OPEC, an oil nation’s monopoly not subject to US law; Natural Gas has no monopoly and is subject to US regulators and supply and demand.

      In my town in North Carolina the independent gas station owners are up early checking everyone else s prices. The margin is very thin but you can find bargains by shopping around.

      • Mark McGwire says:

        The supply of oil is loosely regulated by OPEC. Crude and gasoline prices are determined by speculators in 2 different markets. Speculators eradically bid up prices based on knee-jerk reaction to world events especially in the Middle East where a rubber dingy with two lunatics take a shot with a hand gun at a Naval Destroyer in the gulf and the price immediately is speculated up 5-10% for fear that this event will adversely affect the supply….a joke system and the big oil companies love it.

    • Adam Smith says:

      What happens then when it no longer becomes reasonable to reinvest the small government sanctioned profit amount in searching for new sources? Also do you hate teachers? You must because you would like their retirement funds to be less profitable therefore making it harder for them to retire comfortably. Maybe instead of a flat profit percentage we should consider a flat tax. If the government wants 1 trillion in tax revenue then they should collect 3300 from EVERY american man, woman and child instead of forcing the wealthiest 1% to pay the majority of the tax burden while 45% pay no income tax whatsoever. To each according to his need from each according to his ability right? We know how that philosphy works….it doesn’t.

      • Mark McGwire says:

        The wealthiest 1% control about 99% of the dollars in this country. As an analogy 1000 people are gathered out on your local High School Football field. There is $1000 distributed amongst these 1000 people. 10 out of the 1000 people out on the field get $99 each. The other 990 people have to split the remaining $10 which gives them each a penny. OK so lets tax these people now. Where would you start if you needed to collect $5 in taxes from the original $1000?

        • bill hill says:

          America has the greatest ability to make paupers millionaires which is why we attract entrepreneurs. The wealth disparity is unfortunate but I believe it is not deceit and special favors that favor the wealthy, it is their upbringing. The poor don’t bring up their children well…those that do have children that thrive in our capitalist society. That is the real tragedy…who your parents are and what they teach you. XOM can’t affect this . and to put it differently you can’t polish a sneaker.

        • james greene says:

          Mark you have to add and subtract before you divide. (Some Crazy Math Rule) You would take out the tax before the distribution. Problem Solved…….Happy Happy Happy

        • Robin Hibler says:

          How about you take 10% from the earnings of ALL. That is even, our current tax system is not.
          Your comment about the top 1% controlling 99% of the money is complete nonsense and shows you do not do your own research.

          Did you know that Warren Buffet only EARNS $100,000/yr in income? That is why his taxes are so low, his actual income is not that large. The rest of his money is “capitol gains”, not “income” and taxed differently. Since nearly all of it is reinvested, he pays very little tax on it.

    • James Reid says:

      Exxon paid in $11 billion in federal taxes in the first quarter, of which less than 30% was earned from activity inside the US. $11 billion won’t cover the deficit for 3 days. You are being duped by the main stream media. There gross profit (taxable) averaged 8 cents a gallon, where as the federal goverment earned taxes of 84 cents a gallon.

      The corporate income tax paid and fuel excise tax contributed by sales from Exxon exceeds the combined income tax paid in by the top 10 computer companies and top 10 entertainment companies combined. But if we would drill, baby, drill, Exxon would gladly pay even more taxes.

      • Mark McGwire says:

        Why do we export the Oil produced in Alaska and piped through the Alaskan pipeline to Japan?

        • Tony Boyda says:

          Because it’s cheaper to do that than to go all the way around North America and into the Gulf of Mexico. A better question is why don’t be build refineries on the West Coast?

    • John Matthews says:

      It’s true that stations buy blends, not brands, but so what? What does this have with a monopoly, especially from a company that only does 3% of the total business? Exxon couldn’t be a monopoly if their life depended on it! But, let’s suppose they were. Are you suggesting you would rather have the government form a de facto monopoly through regulation and price fixing?

      How did that work for Nixon with his price and wage controls? Or for FDR with his National Industrial Recovery Act that drove up prices, shut down businesses and cost job losses? Exxon makes 2 cents profit per gallon and build jobs; while the feds take 18.4 cents and blow it into more debt. Now who needs the regulation and responsibility lessons?

      • Mark McGwire says:

        On a monthly basis I pay utilities for Water, Natural Gas and Electricity that I use at my home an amount which guarantees these utilities a fair profit for providing a product to a market which has a single supplier. This system works well and guarantees that I don’t havev to deal with prices fixed because there is no competition in the market. Prices do not swing wildly from day to day. Prices may go up but it is a gradual rise which can be expected given the increased demand for their products. Likewise the gasoline market in my large metro area has a single source. That source determines the base price for every gas station for 200 miles. There is a small variation from station to station but when the refinery raises the price it jumps at every station. This is a monoply and it is why the other utilities are monitored and regulated to protect the consumer from corporations who control the market and collect record profits every qtr.

      • bill hill says:

        The reason all the gas in a city or region is the same is that to build a pipeline is expensive and regulated by FERC. In fact some pipelines allow competing companies to use it and charge a fee for the transport…but how is the marketing of gasoline any different from many of the consumer goods we buy. We all clamor for cool ads from Madison Ave.

    • Nyle Landas says:

      Oh Lord, please save me from those who believe in Government. In New York State where the monopolistic utilities of Electric and Natural Gas suppliers have been “regulated” as you put it, we pay some of the highest rates in the nation. When most of our electric is generated by some of the cheapest methods possible we pay far more per KWh than Texas where most was generated by much more expensive means.

      The Government is one of the reason why you pay so much at the pump for gasoline. Both because of the taxes, restrictions on domestic production and excessive regulation. The only true monopoly is the Government – if you actually allow companies to compete in a free market – prices go down.

      I for one would love Exxon-Mobile to take over supplying my homes energy needs. I’d likely pay 1/10th what I pay now, no – wait a minute the Government is still involved, they’ll manage to make it cost more than it should.

      I pay the “regulated” “natural” monopoly more to deliver the gas and electric to my house than I do for the actual supply. These “regulated” “natural” monopolies are regulated by a Utility commission that is often made up of ex-employees of said “regulated” “natural” monopoly and the politicians receive campaign contributions from these same said “regulated” “natural” monopolies.

      The government already taxes my income, they should not also be entitled to tax me in any other way. We are taxed 3, 4, 5X in this Country and our Founders would be sick to see it.

    • Kamron Daftari says:

      I assume what you mean by flat profit you mean a set price, because most of the varying in oil prices is not do to change in “wants in profit” but more because of changes in cost and other such factors in that manner. Government has tried to regulate oil prices before back in the 70s and it was a disaster, you have long lines, “hidden costs”, among other things.The government has very little say and should have very little say in what oil prices are. The two fighting concepts I see in governemnt about oil is: lower oil prices and/or end forgien oil dependency. Well I see it as that you cant really lower oil prices, and think to end forgien oil dependency. The fact is we dont have oil here in America to end forgien oil dependency so the only other option is to go towards alternative fuels. If you want to go towards alternative fuels, you need to have oil prices rise while subsidizing alternative fuels to push people to transiton to alternatives (a sort of “market indicator”). And if you see as lowering oil prices as a bigger issue, there are better ways than setting flat prices. First, help get global American dollar value up (so it can have more purchasing power). Another (which I like best but is an idea that is for the long haul) is I assume when we are talking about the burden of oil for us it is on transportation costs. Well, setting a MPG standard for car companies (e.g.: every car must run with 60 mpg) can help. This wont help immediately but eventually the lowering in demand of fuel due to higher mpg will lead to lower prices (in economic terms, lower demand causes a shift in demand to… read more »

      …left setting a new equilibrium price that happens to be a lower price). I may have gone completely off topic but love to give my opinion on a topic that I much passion around

    • Ohio Dale says:

      Did you read this article? The oil companies make 8% profit which is very average compared to all corporations. Even if they made zero profit your cost would go down only 1% since they only make a 1% profit on gasoline sold in the US. Exxon paid more in taxes than they made in the US last year. I know gas is expensive but its not the fault of the oil companies its the fault of the weak US dollar, instability in the world, and high taxes. The government makes more per gallon in taxes than the oil company makes per gallon. Please be cautious about automatically blaming oil companies. The politicians want you to place blame on the oil so it diverts attention away from the real cause of high gas prices, the government, especially liberals (socialists).

      • Jerry Harness says:

        I fully understand how crude market values directly relates to the price at the pump, and personally place on blame on the oil industry for fuel prices. Just the same, I hardly view Exxon as one of the biggest tax payers. Stop and take a closer look at the facts. Exxon paid more in taxes than they earned in US profit, yet the US only makes up 3% of their business. Lets see, out of that 3% of business, their profit would be about .2%, at most; so paying more in taxes than .2% of sales really isn’t all that impressive after all.

        My real question is why only 3%? Why must US refineries export most of their products, while the demand is so high here in the US that we must import to make up the dfference?

    • Robin Hibler says:

      Mark,
      This was tried in Hawaii about 3 years ago, it was a complete failure, I lived through it. Prices did not go down, and after a few months they actually started to increase as compared to the oil prices.

      Another problem, there are different blends of gasoline that are required by different states. A refinery is set up to produce a certain blend and changing it is not easy. This is why there were gas shortages when that refinery burned last year in CA. That refinery made a CA specific blend, the other refineries that make that blend had only a small portion of additional production capability and other refineries that had capacity could not make that blend, so there were shortages.
      If this mess of different blends were stopped and gas in CA was the same gas as in WA, NY, etc, you would find that prices would fall and a huge amount of competition would be introduced into the market. Competition is a good thing for consumers, price controls are not. Learn about the “invisible hand” theory of economics, it will make you more aware.
      Utilities are a bit unique, the transmission lines are owned by someone, so choice is neccessarily limited. These things are not as simple as they might appear and few people understand them.

  3. Anthony Murad says:

    Excellent . Exxon is a great company, doing great things for humanity.

  4. Joe AStroturf says:

    We know who’s really responsible for rising energy prices. Thanks Obama you said you’d get gas to sky rocket. “Mission almost Accomplished”. As Obama’s Energy Secretary Steven Chu said ” Somehow we have to figure out how to boost the price of gasoline to the levels in Europe,” . It also helps that they’ll make Uncle George Soros rich and themselves. Go Brazil and Petrobras . George I mean God don’t forget to count Obama’s profits when they vote him out in 2012. He’s depending on you and GE’s immelt to keep the girls living the way they’ve grown accustomed too. I guess Steve’s looking for $9 a gallon. Next healthcare. Gotta run I think I hear the IRS coming.

    Please Check out song called teapartiers I can’t hear you at http://www.youtube.com/watch?v=cJfboOindCo

    Here’s a verse

    Doctors are retiring earlier but we’re getting 17000 new IRS
    This is how Obama creates health care jobs I guess
    For 234 years this country’s been God’s blessing.
    Now he’s following Cloward and Piven’s to bankrupt the country I’m guessing
    If Obamacare gives Grandma and Grandpa a scare
    Think how when their rationed and die earlier we’ll save on healthcare

  5. The Righty says:

    What a great piece….Puts the industry into perspective. I am so tired of all these people who blame the oil companies for gas prices. The do not realize the impact an ExxonMobil has on the economy.

    • J Fred says:

      Let’s take a closer look at some of the figures and how they were reported.

      1. If ExxonMobil’s U.S. Earnings makeup only 3% of the company’s total earnings, and they made $40.5 Billion from 2006-2010 in U.S. earnings, that means they had overall earnings of $1.35 TRILLION over that same time period. Then, if you divide $59 billion paid in U.S. income and other tax expenses by the $1.35 Trillion in overall earnings during this same period, ExxonMobil paid a whopping 4.37% of their company’s earnings to the U.S. in the form of taxes.

      If your argument is that taxes paid to the U.S. should not be based on total earnings….then maybe ExxonMobil should be reclassified as a foreign company as 97% of their earnings are from foreign money.

      2. The graphic that illustrates a $12 billion difference over 25 years (1986-2010) when comparing earnings to investments must be based solely on U.S. earnings, which account for only 3% of the company’s total earnings as it only reflects $407 billion dollars in earnings over 25 years when my previous calculations show them earning $13.5 trillion (calculations were based on figures provided by them) in the 5 years from 2006-2010 alone. Therefore, the graphic skews the numbers by comparing investments to 3% of total earnings instead of 100% of total earnings.

      When the numbers are looked at from this perspective, ExxonMobil & its shareholders are making quite a bit of profit off the backs of the comman person across the world…not just in the U.S.

      • Juan Gonzalez says:

        Your calculations are quite wrong here.

        1. The article states that ExxonMobil’s U.S. GAS earnings makeup 3% of the company’s total earnings, not their U.S earnings. Your $1.35 trillion is quite off.

        2. ExxonMobil made $30.46 billion in net income in 2010 and paid $9.8 billion in taxes. This equates to 23.75% paid in taxes in the U.S. alone. They operate in and pay taxes in many other countries. The $30.46 billion in net income is not solely their U.S. income.

        3. You must remember that ExxonMobil makes money in many different areas besides just gasoline and lubricants. Chemicals asphalts, wax, etc., comprise the other areas in which they operate.

        Therefore, you skew the numbers, not the graphics.

        Also, at any given time you could choose to pull yourself up by your boot straps and make a better living for yourself, but you will never do that. Instead, you’re like the last picked kid in dodgeball who wants to blame the first picked kids for being too athletic or too cool. Unlike pee-wee sports today, everyone doesn’t get a prize in real life for just participating. Quit coveting the wealth and lifestyles of others and you might actually be happy with your own life.

    • Mark McGwire says:

      Yeah they are sucking all of the disposable income right outta my pocket and blaming OPEC. The impact is catastrophic when you look at the secondary effect on prices of every other consumer product and our economy. So much for an economic recovery. The recent rise in gas prices is gonn put the Kabosch on that immediately!

      • bill hill says:

        people need to take responsibility for their lives not blame it on everyone else. You are hurting because you drive too much, or drive the wrong car, or because you refuse to observe that prices for stuff fluctuates (a shocker). And when you say they you are talking about a company that we all own…all of us. That is why we call it a public company because it is owned by shareholders and many are our pension funds. Who do you think gets all these profits…some conspiracy group.

  6. Rick Ward says:

    You should make sure the American public knows about that the US government profits more from your oil than you do.

    You should also stop contributing to the campaigns of politicians who consider you an enemy.

    They will just use your own money to attack you.

    • Mark McGwire says:

      Don’t worry they contribute equally to both parties…sorta covers all the bases…no matter who wins they win! It’s nice when your bank vault is over flowing with funds to influence/buy the politicians.

    • Mark McGwire says:

      Who exactly is the Gov’t again? I know it’s not an omnipotent entity with the desire to control and enslave it’s citizens. Gov’t profits? What are you talking about?

  7. James Yuan says:

    great informative post, thanks!

  8. Lesley Hart says:

    When is everyone going to quit all the games, and start drilling and production on the shale formations in far eastern Montana and western North and South Dakota? Estimates put the volume of recoverable oil at well over 350 billion barrels! To bad that everybody thinks that we’re totally reliant on Middle Eastern oil! It’s time to quit the lies and start drilling and production right here in our own backyard! Wake-up America and smell the crude!!!

    • Curt Goodwin says:

      The big factor everyone seems to be forgetting is the “Supply and Demand” theory. Now in North Dakota the supply issue is clean water to pump into the new wells. Water rights have taken over and water has become the new scarce commodity. It’s all about profit and greed. I just came down from the North Slope in Alaska and paid $5 for a gallon of water! WATER!! If you don’t like paying the price at the pump look at it this way…divide your MPG into the price of a gallon of gas or diesel to find out what you are paying per mile. What ya gonna do?

      • Mark McGwire says:

        Let’s trade Crude for Water….maybe we can drink the stuff!

        How about global warming is expanding the water supply by melting the caps and glaciers so if we keep burning the fossil fuels the ocean will rise and move inland to the Dakotas so they will have all the water they need to get the oil from the Shale!

        • Jerry Harness says:

          Sorry, but many coastal cities will need to be under 10′ of water before it reaches the Dakotas. Not really the best though out plan.

    • J Fred says:

      Let’s get one thing straight. The U.S. is NOT reliant on Middle Eastern oil. We get the majority of our oil from Canada, Mexico, and Venezuela. The fourth in the running is Libya, which is the only Middle Eastern country in our top five. As a nation we also EXPORT oil. So, if we didn’t export we could build our own reserves and ramp up production at our refineries to 100% (instead of the current 80%), which would increase the supply and SHOULD drive down prices (based on the old supply and demand addage). However, that would cut into oil company profits wouldn’t it…

      • J Fred says:

        Export update:
        1. An average of 296,000 barrels per month of “Finished Motor Gasoline” and 42 thousand barrels per month of “Crude Oil” were exported in the year 2010.

        2. In just January and February of this year an average of 410,000 barrels per month of “Finished Motor Gasoline” and an average of 51 thousand barrels per month of “Crude Oil” have been exported.

        (source) http://www.eia.doe.gov/dnav/pet/pet_move_exp_dc_NUS-Z00_mbblpd_m.htm

        **this includes all exports not just ExxonMobil

  9. Bill Kilgore says:

    It’s about time you guys started fighting back. If your building had said Kilgore on the side instead of Exxon at the time that Hillary was talking about confiscation of ALL oil profits to develop wind mills and moonshine, I’d have had full page ads in the NY Times and Washington Post offering to move to any country that would accept 15% taxes from your gross profit instead of 40% plus, not to mention all the leftist hate spewing from the “watermelons” that want to nationalize our oil supply.
    Anyone who takes the time to review the 2010 financial sheets for Exxon provided at the Google Financial site know what’s actually being taken by the Beltway bandits.

    Bill Kilgore

  10. Mark McGwire says:

    Graphic shows taxes at 12% of the price of a gallon of gas. The gas in my neighborhood is not taxed on a percent basis. The cost to refine are not based on % of the total price they are both a flat amount per gallon and as the price rises the only % that increases is the amount of profit per gallon. Do marketing costs increase as the price of a barrel of crude oil goes up? The answer is no. Costs of refining and taxing and marketing are all flat and actuall are a smaller and smaller percentage of the total cost of a gallon of gas. The profit which is left off the graphic increase as the price for a barrel of crude rises. Actual costs are flat.

    • Steve Reinhardt says:

      So? The chart is clearly just a snapshot in time (March 2011, it says) of an average breakdown.

      ExxonMobil has invested a bunch of money in buying/leasing oil fields and pumping oil out of the ground. Those costs are largely fixed, as you say. Now prices rise (thanks to the commodity markets, not through ExxonMobil’s doing), so they get more revenue out of those fixed costs, and thus they make more profit. Most of those profits will either be returned to investors or invested in further exploration (leading to more oil production in the future, eventually keeping prices from rising further).

      Prices could also have gone down. ExxonMobil’s costs would still be fixed, but they would have lower profits (or perhaps no profits at all). They took that risk years ago to invest in production, and for the moment they are reaping that reward.

      This is how markets work. What exactly do you have a problem with?

      • Mark McGwire says:

        they would make the exact same profit unless people started using less gas. If you get off this % thing and realize a flat profit per gallon is fair. If they sell 500 gallons not matter what the cost of the crude is they still make the same amount. Profits explode eponentially when they are based on % rather than true costs of production. The model is broken and it is a hinderence to our economy…wll everyone’s but the large oil companies.

    • Ryan Taylor says:

      If you direct your attention to the bottom of the graphic, you will see the citation “EIA, March 2011″ – the figures used to develop this graphic were clearly obtained from the U.S. Energy Information Administration for the month of March. With a simple Google search consisting of “eia breakdown of a gallon of gasoline”, I found the figures used by the creator of the graphic at this address:
      http://www.eia.doe.gov/oog/info/gdu/gaspump.html
      As you can clearly see, these figures are computed monthly and are likely an average for the entire month. The author made no attempt to claim that taxes have always been and will always be 12 percent of the cost of a gallon of gasoline. It simply turns out that in the month of March 2011, the percentage of production costs for a gallon of gasoline happened to be 12 percent (actually, taxes were 11.3 percent, but if you round all of the numbers, they add up to 99 percent, so the author likely adjusted it for footing purposes).

    • Adam Smith says:

      The costs of acquiring a barrel of oil is not flat. As oil becomes more scarce the price to acquire it will logically go up due to the greater cost of locating new supplies and the difficulty in accessing these supplies. What is a percentage is the tax on coroporate earnings. As Exxon’s profits increase, the government’s income increases. Profit is not evil and should not be limited by government fiat.

    • bill hill says:

      retailers are many times different from the big oil companies. Plus big oil buys lots of its crude and if goes up they buy high just like everyone else.

    • Rockne Newell says:

      The catch here is gas sales they did not include the profit from oil, diesel, & other chemicals from crude oil!

  11. ed caruana says:

    Just for clarification . . .were total pre-tax earnings $99.5 billion for the 5 years noted above? if so, this equates to an effective tax rate of ~59.3%. You must admit that this seems quite onerous. Or, as simply stated, given earnings of $40.5 billion you had paid $59 billion, which is an effective tax rate of ~$145.7%. May I please ask which of my observations above are correct?

    Thanks,

    Ed

  12. Steve Davis says:

    Thank you for fighting lies with facts. Take every opportunity to show this to the public.

  13. Edward Simmons says:

    When are people going to understand that Progressives want to bankrupt this country and make the people dependent on government. We are on the brink with those receiving handouts and entitlements will soon out weigh or out vote those who pay the way. These attacks on private businesses are premeditated and an intentional plan to undermine our economy and take it over. They have infiltrated our media, government and are indoctrinating our children through the education system. All part of the Communist Manifesto, by the way. It is a testimony to American’s gullibility how we keep electing people who have no economic sense, much less business sense. How come the press doesn’t expose how Pelosi won’t let her 1,700 employees unionize? Or how she exempted America Samoa from the minimum wage increase? Starkist influences 80% of the work force there and she and her husband owned 17 million in Starkist stock at the time. Starkist is a huge donor to her campaign, too. Wake up America, we are losing our country.

    • J Fred says:

      When are people going to understand that the top 1% of of Americans now take home almost 24 percent of income, up from almost 9 percent in 1976. As Timothy Noah of Slate noted in an excellent series on inequality, the United States now arguably has a more unequal distribution of wealth than traditional banana republics like Nicaragua, Venezuela and Guyana.

      C.E.O.’s of the largest American companies earned an average of 42 times as much as the average worker in 1980, but 531 times as much in 2001. Perhaps the most astounding statistic is this: From 1980 to 2005, more than four-fifths of the total increase in American incomes went to the richest 1 percent. (http://www.nytimes.com/2010/11/07/opinion/07kristof.html)

      So when are people going to understand that the wealthiest of the wealthy despise the middle class and would like to extinguish us as we are well on our way to becoming a 2-class society in the country.

      • Nyle Landas says:

        False information and part of the propaganda of the class warfare movement. America is one of the most upwardly mobile societies in the world. If we give the Government the control to “redistribute wealth” in other words steal from those you would classify as “evil rich” and give to the poor, we will all end up poorer for it. No one will be rich and we certainly won’t have any freedom.

        The wealthy in this Country already pay the majority of taxes. Look it up – a large percentage of our population pays no taxes and instead gets money back. The wealthy are made up of people who used to be part of the middle class. This isn’t Europe where we are locked into our lot in life by a caste system.

        Work hard, make good choices and become one of those you are trying to make others despise. This class warfare is right out of the Communist doctrine.

  14. clay m says:

    I would like to urge people not to buy into the propaganda being disseminated by “certain” groups that oil companies are evil. Exxon is not evil, they supply thousands of jobs, provide opportunity to invest which allows people to hopefully one day retire, and provide the lifeblood that fuels this nation. Yes they are out to make a profit, since when is that a bad thing. People need to realize the real reason oil costs so much, the government. Everything from taxes to increased cost because of too many administrative expenses dealing with red tape and excessive regulation. I do not work for Exxon nor do I own any stock. If people are going to pick on Exxon they need to point a finger at GE as well.

    • Mark McGwire says:

      Exxons profits are obscene!

      • bill hill says:

        I believe you are upset with the executives of XOM not the actual company. WE are the owners of XOM and the executives work for us and in my opinion they get way too much money. I believe the only executives who deserve obscene remuneration are those who start a company not the hired guns whose only risk is that their severance package is too small. Like the Facebook guy, he started the company has much of the stock and so he deserves to be a billionaire.

  15. Javan Zeito says:

    Mr. Cohen,
    Very well written Sir. I’m so tired of hearing about about how the oil business doesn’t pay taxes or how they hike up prices. It’s time the industry counters this slander with articles such as this. And thanks Drudge, for linking this up.

  16. Jin Zhou says:

    Why doesn’t ExxonMobil relocate to a different country that is more friendly to oil like Canada? Then see how people in the U.S. feel about oil. I bet shareholders would love that if there is a way to do it.

  17. Doug Bartlett says:

    Mr. Cohen-

    How refreshing to finally see an American company stick up for itself on a public stage with facts and confidence. You may only earn 2 cents a gallon, but Exxon will be getting my 2 cents from now on.

    Congratulations on a great quarter and a great company spirit.

  18. Katie Thomas says:

    First of all, I think it is AWESOME that they titled this article “…..a few things to think about the next time you fill up”. Ok, at this point, I’m not freakin’ worried about Exxon’s profits, or how much taxes THEY pay, or whether or not they invest in new energy supplies. Allow me to break this down for everyone who is clearly brainwashed, ( or for those who really work for Exxon and and posting comments with titles that start out with ” Excellent Post” or “Very Informative” ). #1.) I am not ( and nor is most of the United States) thinking about Exxon’s, or any other oil company’s profits when I am filling up my tank. I am thinking “Wow, I have a 2010 Kiua Optima with a 14 gallon tank and I just spent $55.00. Hopefully nothing important will come up any time soon, because I can only do THIS once a week.” #2.) Let me explain something to ALL of the oil companies….whether or not it is your fault that gas is so high is irrelevant, the good, hardworking people of America (if we are lucky enough to have jobs) don’t really care how much your company pays in taxes every year. We pay taxes too. The big difference is, we are not a multi-million dollar corporation and WE can’t afford the tax on gas. #3.) It’s all fine and good if you put in writing (on a blog) that you invest in in new energy supplies, but until WE see them, it doesn’t matter. There are alternative energy sources out there; problem is, oil companies (ALL OF THEM) and special interest groups make TOO much money off of crude oil….so they rest of us won’t see these alternative sources of energy for a while…if… read more »

    …ever. #4.) Exxon…do yourself a favor…and other oil companies should read this part and store it in your memory for future reference…when gas prices are at a national high of $4.15 (or higher) per gallon, don’t try and save face by posting “your side of the story”, on YOUR site, trying to make the pill easier to swallow, while the rest of us are making life decisions at the gas pump. A lot of people are sitting at home this very moment trying to figure out how they are going to put their bills, eat and get to work to continue the cycle of being broke. Maybe the next time you decide to post a blog on your site, it could come from the “average, every-day American’s” perspective.

    • Richard Bramwell says:

      Wherever someone is demanding sacrifice, there is always someone demanding to receive it.

      Katie Thomas demonstrates exactly what is wrong with America: abysmal envy of those she perceives as having more than her, AND a stagnant MORAL COMPASS. For her, if someone has created a wealth value, it is just fine for it to be taken, so long as it is through the facade of government force (taxation is always at the point of a barely hidden gun).

      Hers is the dominant morality known as “altruism”, the morality of “sacrifice”. The people that live by this morality think its just fine if money, personal time, or even LIVES are destroyed (soldiers) so long as it done for someone or something else.

      The altruists are especially strident when that those who DO *earn* money (make a profit) should give it up. But why? Only so that the altruists can grab the hand outs *without* earning them. Thomas should want cheap gas, but not *because* oil companies make a profit that should be sacrificed to her grasping fingers! She should want the greater portion of the price of gas ─after all costs of getting it into her tank are paid─ to be repealed, because that portion is multiple layers of taxes imposed by political altruists so they can spend other people’s money on their pet social-engineering programs).

      Thomas’ view is completely anti-Capitalist and anti-American. America is great because of Capitalism, and in spite of a nonsensical burden of socialist (Democrat) & religious (GOP) based legislation & taxation against it. She should learn about Capitalism, Economics & the Free Market, Individual Rights or move to Sweden, France or Beijing.

    • Bob Roberts says:

      So Katie, let’s use your numbers about your car for a moment.
      If you fill up once a week and purchase 14 gallons each time and, say, we add in 3 random extra fillups a year, that’s 770 gallons of gasoline in your Kia per year.

      Here’s roughly what you pay per year in gas based on prices.

      @ $2/gallon you pay: $1540/year
      @ $3/gallon you pay: $2310/year
      @ $4/gallon you pay: $3080/year
      @ $5/gallon you pay: $3850/year
      @ $6/gallon you pay: $4620/year

      That sucks. At $6/gallon you will pay roughly $88.00/week for gas.

      All the time, while your prices are going up these evil oil companies are still making 2 cents-ish per gallon.

      If you want to see a real effect on your wallet from high fuel prices start watching your grocery bill. Do you buy a lot of bottled water? It currently costs about 32 cents a gallon for that water to be bottled and trucked to the store. You probably pay about $8 a gallon for it. I think I see an area where you can make up the difference in the cost of fuel.

      • J Fred says:

        If you would calculate the numbers instead of guess you would see that your figures are flawed. I pay $2.99 (+tax) for 24-16oz bottles of water. This means that 384 oz of water(24 x 16) divided by 64 oz/gallon would equal 6 gallons of water for just over $0.50 /gallon (+ tax). Far lower than a gallon of gas. Guess we’ll have to make up the cost in another way.

    • Boone Lowe says:

      Katie, I see this from both sides. My father worked for Exxon for 30 years and my grandfather retired from them, as well. As a matter of fact, Exxon is where my parents first met, so I surely have at least a little bias, since you want total honesty. However, my wife currently commutes 100+ miles round trip everyday for work. She drives an Honda Ridgeline, which she has to fill up at least every 2-3 days. I drive a bit less than 50 miles roundtrip for my work in a Hyundai Sonata. We also have two teenage daughters whom we are trying to get ready for college. The point in all of this is that I feel the “pain at the pump”, also. I am not an executive, nor is my wife. She works in accounting for a small business (less than 10 people) and I work at a local glass company. You CANNOT blame oil companies when they are making a profit when I can almost guarantee that you sure as heck didn’t offer to throw them a bone in the 80′s when gas prices were at an all-time low and they were seriously struggling. Do not think for one second that Exxon was required to come out with this piece. They volunteered this information, which you can check, if you have the desire to actually look for facts, instead of just spewing what other’s have told you. Those of us who actually look for those facts are the one’s that actually do think about company profits, government waste, and the like, not only when we fill up our tanks, but many times during the course of the day. If you can’t be bothered… read more »

      …by the road that this nation is being forced to go down because of your bills or any other life decisions that need to be made, then maybe you shouldn’t comment on something that you self-admittedly never took the time to think about.

    • Curt Goodwin says:

      I too am one of your everyday Americans that just gets by at the end of my paydays..but who are we to say how much profit is too much? How much profit does McDonalds make on an order of fries? How much profit is there on a gallon of milk? Aren’t they in business to make a profit? If you don’t like how much profit they make, don’t do business with them. Right now supply is down and demand is high. I agree it sucks! What ya gonna do?

      • bill hill says:

        This was amazing and frank and well, perfect. Political correctness make me ill and results in such lies and distractions. Keep up the clarity.

    • J Fred says:

      Kudos and a GRAND applause goes to you and your comments….you have said what MOST Americans are truly thinking. Thank You!!!

    • bill hill says:

      Katie, interesting points. XOM like everyone else wants to sell their story. Their discussing that only 3% of earnings comes from gas while true is a bit misleading. The reason that it is only 3% is because they have to buy their crude from others and so this refining side of their business suffer like you do. What they don’t say is that the exploration side of the business is booming with high prices. The truth is that when crude prices spike the expenses to drill the wells skyrocket as well. I knew an oil company who had to get new bids weekly for drilling their wells because the drilling companies kept raising their prices because they could. This is the way the markets work. I blame, if someone besides ourselves is to blame, the government for allowing the development of SUVs and low mileage cars…which comes down to the American people. We have ignored conservation efforts and this is what we get. Is there any conservation in your world and in the lives that surrond you. My guess is not enough.

      • bill hill says:

        here is a list f world oil consumption from the CIA:

        RANK
        COUNTRY (BBL/DAY) DATE OF INFORMATION
        1 United States
        18,690,000
        2009 est.
        2 European Union
        13,630,000
        2009 est.
        3 China
        8,200,000
        2009 est.
        4 Japan
        4,363,000
        2009 est.
        5 India
        2,980,000
        2009 est.
        6 Russia
        2,740,000
        2010 est.

    • Coby McNut says:

      The same people making life decisions at the pump are the ones who use that gas to drive to Starbucks and pay five bucks for a frappaccino. Who says four dollars/gallon is expensive? What should it be? Why is a four dollar happy meal a bargain but four dollars for gas is outrageous? McDonalds has way better margins and their food than XOM does on its gas, why not boycott Ronald? It’s all relative and the only reason i can figure that people complain about four dollar/gallon gas is because they can remember a time when it was two dollars/gallon. But wouldn’t we still pay for gas if it was ten dollars/gallon? So why complain at all.

  19. John Weiglhofer says:

    If Congress wants to continue, “… taking away long-standing deductions for our industry while leaving these same deductions in place for other sectors of the economy”, why doesn’t ExxonMobil and other firms in the oil and gas industry push back on the basis that tax discrimination is unconstitutional?

    Article 1, Section 8 of the Constitution states, “The Congress shall have Power To lay and collect Taxes, Duties,…but all Duties, Imposts and Excises shall be uniform throughout the United States.”

    • J Fred says:

      If this is the case, then why does Jeep get huge tax cuts in my city….why did Kasich just grant $56million in tax cuts, incentives, and loans to Diebold, Inc. to keep them in Ohio when other industries/businesses don’t get these same tax breaks. Why? because large corporations are holding our cities, states, and country hostage by making claims that they are taxed to death & will therefore take their business elsewhere if we don’t succumb to their demands of lower taxes…..while at the same time they continue to pay out large sums to stockholders and even more in bonuses/per person to their CEOs and managers while the individual struggles more and more each day. I am a public employee in Ohio and will gladly give up the difference of my 12% pension investment income from oil companies for lower investment return from an industry that doesn’t have such a negative impact on the U.S. economy and the working class person.

  20. Mark McGwire says:

    • The wealthiest 1% control about 99% of the dollars in this country. As an analogy 1000 people are gathered out on your local High School Football field. There is $1000 distributed amongst these 1000 people. 10 out of the 1000 people out on the field get $99 each. The other 990 people have to split the remaining $10 which gives them each about a penny. This is an equivalent wealth distribution ratio to what we actually have in the US. OK so let’s tax these 1000 people now so we can have a road system, a Defense department, an education system and medical care for those who become ill. Where would you start if you needed to collect $5 in taxes from the original $1000?

  21. Jeremiah Tremble says:

    Its good to see the information out in the open a few thoughts on this matter.

    1. If you believe in modern economic theory then the more you tax something the less of that something will be produced. Its basic supply and demand econ 101 stuff. So if you increase taxes (or remove tax breaks) you will see less production of fuel which translated to high fuel prices. This is basic scientific fact from an economics standpoint.

    2. Supply and Demand dictate the price of crude oil as well as to some extent price setting by OPEC. Because China and India are emerging economies and weren’t really affected by this recession the demand has rose while the supply has stayed the same and so prices have increased.

    3. As the dollar weakens internationally you see higher prices on input resources such as gold, silver, steel, and yes gas, just to name a few.

    Solutions:
    The Government: Deregulation and decrease of taxation are the only two things that government can realistic do without trying to affect the consumption habits of of the US such as putting a flat fee gas tax on all registration of gas guzzling vehicles like the hummer or SUVs (which i totally disagree on btw). Deregulation would allow companies to drill oil in the US and increase supply thereby decreasing costs. But lets be honest none of that’s likely to happen too many fingers in the doe so to speak. So what can you do to spend less money on gas?
    You: Do all the gas saving tips that other blogs post such as over inflating the tires, have a clean car keep the windows rolled up, keep the ac off, etc. You could also think about investing in a… read more »

    …new car something that gets more then 10 mpg downhill. You could ride a motorcycle, or bike, or take public transportation. You could also convert your vehicle in to running on natural gas/propane (really popular in Texas i hear). For those of you who commute long distance every day you could craigslist to see if anybodies interested in carpooling talk to your boss about going on 12 hr shifts or better yet telecommuting. Or move closer to work to you don’t have to drive as far

    Ultimately you can’t control the price of gas so why moan about it just “suck it up” as my football coach always use to say adapt to the changing times and move forward from there.

    Side note: Gas prices are now and will continue to be on an upward trend plan accordingly and don’t be surprised when gas reaches $5 this summer in cali. (I adapted by trading in my 20mpg Pontiac for a 60mpg motorcycle and i look forward to the drive every morning)

    • Robert Kriegar says:

      Ultimately, the price of gasoline CAN be controlled-by government regulation, and the same laws of supply and demand that you quote.

      One buying block of 3% of all gasoline sales amounts to a substantial and significant customer. Do not let their quoted, and their supplied numbers fool you. Even by their own lowball numbers, they would still amount to a substantial figure.

  22. George Bily says:

    Do not think for a minute that Exon and others do not ‘set’ prices. Here is how they do it. Everyday, they decide just how much the station owner must pay them for the gas that is pumped that day at the station! Yep, pumped that day! Based on that price, then the station adds in a few cents to cover costs and try to make a small profit.

    What happens if an Exon station owner does not follow the ‘rules’? Simple, somewhere in the contract it will state that a station owner must pump X amount of gas a month. The way that Exon is able to drive them out of business is simply not to deliver the gas!

    I’ve seen it done by Texaco to a station owner (close friend). He did not meet his ‘quota’ so the license was revoked! And the reason he did not meet his ‘quota’ was because the company did not deliver enogh gas!

    No where in the contract will you find just how much gas will be delivered monthly, it will only talk about how much needs to be pumped by the station owner monthly.

    This B.S. article only serves to mask the facts, it is not telling you the actual truth.

  23. Jeffrey Gold says:

    The article fails to mention Goldman Sachs’ (GS) manipulation of the commodities futures and manipulation of the Commodities Futures Trading Commission (CFTC) through a special secret letter granted to GS (via their manipulation) in years prior to Brooksley Born’s tenure at the CFTC. (Brooksley Born was the one who said that certain financial instruments—the very same ones that nearly took down the U.S.—should be regulated, and was quickly shown the door.) [Source: Matt Taibbi, The Great American Bubble Machine; WSJ]

    Furthermore, given that the American people grant ExxonMobil the right to do business in America, I feel that the oil belongs to the American people collectively—especially given the fact that national treasure via our private interest foreign policy (PIFP) goes into securing or protecting American and international private interests in the Middle East. At the same time, I have no issue for ExxonMobil to make a profit from their activity—after all, they are there doing the work, but there must be a full accounting for their externalities (which we all pay for), and out-of-proportion executive salaries and their lavish retirement packages (which most of these charlatans vote for themselves in what is termed “control fraud”).

    • Nyle Landas says:

      Communists always want to control everything for the public good. The Government taking private property is against what our Country was founded on. What occurs is that any time someone creates something of value someone who covets what they have built claims it is for the public good and collectively takes it all away.

      It matters not in whose name you steal, it still makes you a thief and under such a system where no man can be assured of the safety of their hard earned property, you quickly end up with nothing but a nation of thieves and nothing of wealth left to steal.

      It’s been tried before many times, feel free to move to a Country where it is still going on or they are still recovering from it. Please don’t keep trying to force the rest of us into your Commune.

  24. Privacy Appreciated says:

    “ExxonMobil earnings go to our shareholders”

    And to the executives… The news regularly reports the compensation of the top paid corporate executives, and ExxonMobil executives can almost always be found in those lists….

  25. Brian Morrell says:

    For all the comments about ExxonMobil’s profits and for that matter any oil and gas companies profits there is one thing to be remembered. They do not hold a gun to your head and force you to use their products. You don’t like them ? Find another energy source.

  26. R Davis says:

    $0.02 profit per gallon is even cuter than $2.62 per gallon costs. Please, please don’t play with us like Enron did. You have got to be smarter than that…or do you?

  27. Tim Smothers says:

    Having worked at several gas stations, I know that the prices are actually set by the refineries and delivery costs as well as by the amount of fuel the stations sell. The less they sell the more they pay for the gas. This is the normal business practice. This practice is unfair to all consumers.
    I also know that there are bad guys in the business that try to rip off the consumer. Take the rifinery in Washington state for instance. After their firs they stated that normal production would take awhile to return to normal. A federal investigation proved that they lied and production stayed the same. It would benefit the industry to feret out these miscreants so they can go to prison

  28. Robert Kriegar says:

    This is all very interesting, particularly if one chooses to blindly believe the numbers provided. One does wonder, however, what is to be said now that the oil companies have produced record profits off the backs of the BUYING public?

    And how, exactly, does 3% of all gas sold divide into record profits, .02 cents per gallon, and government subsidies, exactly?

    I say the the blind supporters of this article are indeed oil company shills, or investors, or both.

    “Less than 3 percent of ExxonMobil’s earnings are from U.S. gasoline sales”

    And what, exactly, does this equate to, in terms of hard numbers? Less that 3 percent of the total volume of the Sun is still a very substantial number-so why don’t you simply use a NUMBER??? Because you want to be all shady about your business, that’s why.

    Your business activity is driving prices through the roof in the United States, and frankly, you need to be reigned in, but quick! And all of the specious excuses for crude increases need to be thrown where they belong-in the trash!

  29. Bogus Propaganda Blog says:

    The funniest thing about this “blog” is how a piece of blatant, self-serving propaganda can cause a bunch of people who receive absolutely no benefit from any profits the oil companies are describing here to post comments as Big Oil’s surrogate cheerleaders. Big Oil are making quite enough in profits to be their own cheerleaders without needing the general public’s help as evidenced by this “blogs” very existence. I am sure this post will generate some characters who will post that they are profiting from Big Oil’s endeavors. However, people who truly profit from what is described in this blog never post a thing on here and are laughing out loud at people who are making supportive posts on here :-)

  30. Jonathan Amadeus says:

    Why wasn’t 2011 included in the chart for taxes paid and revenue? I would also prefer for it to be presented as a bar chart instead of that. It would be nice to see the year-to-year trend.

  31. mark vincent says:

    Last year we were a net EXPORTER of gasoline. That means we had excess supply. We are driving less or smarter and the prices are still high. We have more oil due to oil shale deposits to make us self-sufficient for generations to come. Why is the supply side not increasing? Why does our oil have to be tied to a global market?

    It seems that since 2003 the only people to have benefited from our excursion into the Middle East are oil companies

  32. Dave Heffline says:

    You still dodge the question on pricing. What is the breakdown of the $2.62 per gallon of crude.

  33. JOE MYERS says:

    What a load of garbage. Exxon Mobile controls the price of gasoline. They refuse to build more refineries even when they are asked. The company has absolutely no environmental record except bad. The only thing that is important is profit.The price of crude is controlled by the petroleum industry. Do you really think that people that live in tents are able to negotiate with the biggest company in the world?? The fact is the petroleum industry has suppressed innovation and invention to keep their hold on power. The Oil companies should be Nationalized.

  34. Barrel Full says:

    ……Oil markets are well supplied today, but uncertainty about tomorrow’s supply is reflected in prices today…….

    It is very important that the uncertainty is reflected in today’s prices, because that sends a signal to oil companies to invest. What so many of the critics don’t seem to want to understand is that the lower prices are, the less investment will be made, and future prices will be higher.

  35. Mark McGwire says:

    Why isn’t the price at the pump for Gasoline regulated like the rate I pay for Natural Gas or the electricity I use in my home? Utility commissions oversee rate increases for Nat. Gas and Electricity because consumers are subject to Monopolies in the marketplace. In order to protect consumers commissions oversee utilities and allow suppliers a fair profit. This system puts sanity in the pricing and eliminates the wide swings in prices we see in the pricing of Gasoline. I know what you are thinking and I defined the utility companies supplying your residence or business as a Monopoly and the Oil companmies will say they are not a Monopoly and their is freedom to choose in the market. There are many different brands of Gasoline to choose from right? Guess what though. No matter what brand you choose it’s all the same stuff. Every gallon of gas sold in my city no matter what brand is emblazoned acros the pump comes from the same oil and same refinery. On toppof that there is no competition to set the price. They all sell the same product for the same price. Monopoly! Gasoline prices need to be regulated to allow for a fair profit. Gasoline profit needs to be based on a flat profit per gallon no matter what the cost of a barrel of oil happens to be inflated to. Can we have a flat profit rather than a % which inflates profites as the price of oil goes up. Can we leave a few crumbs in the pockets of consumers so they can afford a decent standard of living. Exxon Mobil give us a break and change your profit model from… read more »

    …a percentage to a flat amount which reflects your actual refining and delivery costs. We can do this the hard way or the easy way it’s up to you. Gov’t regulation or Private fiscal responsibility.

    Thanks for listening.

    • Oil Co. Shill says:

      Thanks for reading… or for not reading. Exxon makes 2 cents, on average, on every gallon of gas, how’s that for a “flat profit”? You don’t even have the first clue as to how to define a monopoly, at least you could have given us some nonsense about “barriers to entry.” Please, re-read the blog post, then try to make some sense of your rambling comment.

      • Mark McGwire says:

        Bull. Then you must have been losing money when gas prices were at $2.50/gal right?

        • bill hill says:

          Mark,
          Crude prices are a huge cost of producing gasoline and EOM buys a ton of it to keep their refineries busy. So when crude prices go up the refining side suffers but the exploration side makes more money. Any way we are talking margin here not price.

      • George Andreadis says:

        Double bull, I read it as well, you must be selling an enormous amount of gas at $0.02 profit per gallon to make the billions of profit per quarter.

        I have a bridge I want to sell, are you interested?

        • Paul Jones says:

          Again… did you read the article? The VERY FIRST BOLD LINE STATES… “Less than 3 percent of ExxonMobil’s earnings are from U.S. gasoline sales”
          OK. Maybe you did read, you just can’t comprehend.
          Where is that bridge?

        • Marc Stanford says:

          George, your double bull might hold water IF gasoline were the only product sold by Exxon. Seriously, do some research before posting a simpleton statement like that…

        • Bob Michaud says:

          OK George – here’s the story. We use a lot of gas for our cars in this country. So! Yes! We do use an enormous amount of gas. Want to complain about something – how about the taxes on gas! Go home! Walk, by the way.

    • Mitch Kennedy says:

      I have a couple issues with your post…

      1. Pricing based on a flat fee per gallon sold is good for the consumer when the price is high. When the price is low however it doesn’t work as well. Secondly, a set revenue schedule will eventually erode efficiency and prices will go up as a result. It will take time but certainly happen.

      2. Fiscal responsibilities…they make slightly over $0.02 per gallon sold….when the prices are at an all time high. Based on prices in my neighborhood that is less 1/2 of 1% of the cost of a gallon of gas. So cut that in half…who cares…a cost of a gallon of gas is now $0.01 less. I don’t believe $3.99 instead of $4.00 per gallon is going to make much difference to people.

      • Mark McGwire says:

        If you believe that they are only making .02/gal then they were losing money on every gal sold until only recently. If you bilieve this nonsense then I would like to sell you some real estate in Afghanistan.

        • Paul Jones says:

          Same thing I posted to George, above…
          Again… did you read the article? The VERY FIRST BOLD LINE STATES… “Less than 3 percent of ExxonMobil’s earnings are from U.S. gasoline sales”
          OK. Maybe you did read, you just can’t comprehend.

    • Harold Hunt says:

      Oil is regulated by OPEC, an oil nation’s monopoly not subject to US law; Natural Gas has no monopoly and is subject to US regulators and supply and demand.

      In my town in North Carolina the independent gas station owners are up early checking everyone else s prices. The margin is very thin but you can find bargains by shopping around.

      • Mark McGwire says:

        The supply of oil is loosely regulated by OPEC. Crude and gasoline prices are determined by speculators in 2 different markets. Speculators eradically bid up prices based on knee-jerk reaction to world events especially in the Middle East where a rubber dingy with two lunatics take a shot with a hand gun at a Naval Destroyer in the gulf and the price immediately is speculated up 5-10% for fear that this event will adversely affect the supply….a joke system and the big oil companies love it.

    • Adam Smith says:

      What happens then when it no longer becomes reasonable to reinvest the small government sanctioned profit amount in searching for new sources? Also do you hate teachers? You must because you would like their retirement funds to be less profitable therefore making it harder for them to retire comfortably. Maybe instead of a flat profit percentage we should consider a flat tax. If the government wants 1 trillion in tax revenue then they should collect 3300 from EVERY american man, woman and child instead of forcing the wealthiest 1% to pay the majority of the tax burden while 45% pay no income tax whatsoever. To each according to his need from each according to his ability right? We know how that philosphy works….it doesn’t.

      • Mark McGwire says:

        The wealthiest 1% control about 99% of the dollars in this country. As an analogy 1000 people are gathered out on your local High School Football field. There is $1000 distributed amongst these 1000 people. 10 out of the 1000 people out on the field get $99 each. The other 990 people have to split the remaining $10 which gives them each a penny. OK so lets tax these people now. Where would you start if you needed to collect $5 in taxes from the original $1000?

        • bill hill says:

          America has the greatest ability to make paupers millionaires which is why we attract entrepreneurs. The wealth disparity is unfortunate but I believe it is not deceit and special favors that favor the wealthy, it is their upbringing. The poor don’t bring up their children well…those that do have children that thrive in our capitalist society. That is the real tragedy…who your parents are and what they teach you. XOM can’t affect this . and to put it differently you can’t polish a sneaker.

        • james greene says:

          Mark you have to add and subtract before you divide. (Some Crazy Math Rule) You would take out the tax before the distribution. Problem Solved…….Happy Happy Happy

        • Robin Hibler says:

          How about you take 10% from the earnings of ALL. That is even, our current tax system is not.
          Your comment about the top 1% controlling 99% of the money is complete nonsense and shows you do not do your own research.

          Did you know that Warren Buffet only EARNS $100,000/yr in income? That is why his taxes are so low, his actual income is not that large. The rest of his money is “capitol gains”, not “income” and taxed differently. Since nearly all of it is reinvested, he pays very little tax on it.

    • James Reid says:

      Exxon paid in $11 billion in federal taxes in the first quarter, of which less than 30% was earned from activity inside the US. $11 billion won’t cover the deficit for 3 days. You are being duped by the main stream media. There gross profit (taxable) averaged 8 cents a gallon, where as the federal goverment earned taxes of 84 cents a gallon.

      The corporate income tax paid and fuel excise tax contributed by sales from Exxon exceeds the combined income tax paid in by the top 10 computer companies and top 10 entertainment companies combined. But if we would drill, baby, drill, Exxon would gladly pay even more taxes.

      • Mark McGwire says:

        Why do we export the Oil produced in Alaska and piped through the Alaskan pipeline to Japan?

        • Tony Boyda says:

          Because it’s cheaper to do that than to go all the way around North America and into the Gulf of Mexico. A better question is why don’t be build refineries on the West Coast?

    • John Matthews says:

      It’s true that stations buy blends, not brands, but so what? What does this have with a monopoly, especially from a company that only does 3% of the total business? Exxon couldn’t be a monopoly if their life depended on it! But, let’s suppose they were. Are you suggesting you would rather have the government form a de facto monopoly through regulation and price fixing?

      How did that work for Nixon with his price and wage controls? Or for FDR with his National Industrial Recovery Act that drove up prices, shut down businesses and cost job losses? Exxon makes 2 cents profit per gallon and build jobs; while the feds take 18.4 cents and blow it into more debt. Now who needs the regulation and responsibility lessons?

      • Mark McGwire says:

        On a monthly basis I pay utilities for Water, Natural Gas and Electricity that I use at my home an amount which guarantees these utilities a fair profit for providing a product to a market which has a single supplier. This system works well and guarantees that I don’t havev to deal with prices fixed because there is no competition in the market. Prices do not swing wildly from day to day. Prices may go up but it is a gradual rise which can be expected given the increased demand for their products. Likewise the gasoline market in my large metro area has a single source. That source determines the base price for every gas station for 200 miles. There is a small variation from station to station but when the refinery raises the price it jumps at every station. This is a monoply and it is why the other utilities are monitored and regulated to protect the consumer from corporations who control the market and collect record profits every qtr.

      • bill hill says:

        The reason all the gas in a city or region is the same is that to build a pipeline is expensive and regulated by FERC. In fact some pipelines allow competing companies to use it and charge a fee for the transport…but how is the marketing of gasoline any different from many of the consumer goods we buy. We all clamor for cool ads from Madison Ave.

    • Nyle Landas says:

      Oh Lord, please save me from those who believe in Government. In New York State where the monopolistic utilities of Electric and Natural Gas suppliers have been “regulated” as you put it, we pay some of the highest rates in the nation. When most of our electric is generated by some of the cheapest methods possible we pay far more per KWh than Texas where most was generated by much more expensive means.

      The Government is one of the reason why you pay so much at the pump for gasoline. Both because of the taxes, restrictions on domestic production and excessive regulation. The only true monopoly is the Government – if you actually allow companies to compete in a free market – prices go down.

      I for one would love Exxon-Mobile to take over supplying my homes energy needs. I’d likely pay 1/10th what I pay now, no – wait a minute the Government is still involved, they’ll manage to make it cost more than it should.

      I pay the “regulated” “natural” monopoly more to deliver the gas and electric to my house than I do for the actual supply. These “regulated” “natural” monopolies are regulated by a Utility commission that is often made up of ex-employees of said “regulated” “natural” monopoly and the politicians receive campaign contributions from these same said “regulated” “natural” monopolies.

      The government already taxes my income, they should not also be entitled to tax me in any other way. We are taxed 3, 4, 5X in this Country and our Founders would be sick to see it.

    • Kamron Daftari says:

      I assume what you mean by flat profit you mean a set price, because most of the varying in oil prices is not do to change in “wants in profit” but more because of changes in cost and other such factors in that manner. Government has tried to regulate oil prices before back in the 70s and it was a disaster, you have long lines, “hidden costs”, among other things.The government has very little say and should have very little say in what oil prices are. The two fighting concepts I see in governemnt about oil is: lower oil prices and/or end forgien oil dependency. Well I see it as that you cant really lower oil prices, and think to end forgien oil dependency. The fact is we dont have oil here in America to end forgien oil dependency so the only other option is to go towards alternative fuels. If you want to go towards alternative fuels, you need to have oil prices rise while subsidizing alternative fuels to push people to transiton to alternatives (a sort of “market indicator”). And if you see as lowering oil prices as a bigger issue, there are better ways than setting flat prices. First, help get global American dollar value up (so it can have more purchasing power). Another (which I like best but is an idea that is for the long haul) is I assume when we are talking about the burden of oil for us it is on transportation costs. Well, setting a MPG standard for car companies (e.g.: every car must run with 60 mpg) can help. This wont help immediately but eventually the lowering in demand of fuel due to higher mpg will lead to lower prices (in economic terms, lower demand causes a shift in demand to… read more »

      …left setting a new equilibrium price that happens to be a lower price). I may have gone completely off topic but love to give my opinion on a topic that I much passion around

    • Ohio Dale says:

      Did you read this article? The oil companies make 8% profit which is very average compared to all corporations. Even if they made zero profit your cost would go down only 1% since they only make a 1% profit on gasoline sold in the US. Exxon paid more in taxes than they made in the US last year. I know gas is expensive but its not the fault of the oil companies its the fault of the weak US dollar, instability in the world, and high taxes. The government makes more per gallon in taxes than the oil company makes per gallon. Please be cautious about automatically blaming oil companies. The politicians want you to place blame on the oil so it diverts attention away from the real cause of high gas prices, the government, especially liberals (socialists).

      • Jerry Harness says:

        I fully understand how crude market values directly relates to the price at the pump, and personally place on blame on the oil industry for fuel prices. Just the same, I hardly view Exxon as one of the biggest tax payers. Stop and take a closer look at the facts. Exxon paid more in taxes than they earned in US profit, yet the US only makes up 3% of their business. Lets see, out of that 3% of business, their profit would be about .2%, at most; so paying more in taxes than .2% of sales really isn’t all that impressive after all.

        My real question is why only 3%? Why must US refineries export most of their products, while the demand is so high here in the US that we must import to make up the dfference?

    • Robin Hibler says:

      Mark,
      This was tried in Hawaii about 3 years ago, it was a complete failure, I lived through it. Prices did not go down, and after a few months they actually started to increase as compared to the oil prices.

      Another problem, there are different blends of gasoline that are required by different states. A refinery is set up to produce a certain blend and changing it is not easy. This is why there were gas shortages when that refinery burned last year in CA. That refinery made a CA specific blend, the other refineries that make that blend had only a small portion of additional production capability and other refineries that had capacity could not make that blend, so there were shortages.
      If this mess of different blends were stopped and gas in CA was the same gas as in WA, NY, etc, you would find that prices would fall and a huge amount of competition would be introduced into the market. Competition is a good thing for consumers, price controls are not. Learn about the “invisible hand” theory of economics, it will make you more aware.
      Utilities are a bit unique, the transmission lines are owned by someone, so choice is neccessarily limited. These things are not as simple as they might appear and few people understand them.

  36. Anthony Murad says:

    Excellent . Exxon is a great company, doing great things for humanity.