ExxonMobil on Thursday fed the angry lions in Congress and environmental community who believe oil companies are the root of America's dependence on Middle East oil by posting the largest ever annual profit by a U.S. company – $39.5 billion.
The earnings performance topped the previous record, also by ExxonMobil, of $36.13 billion set in 2005. The record earnings amounted to about $4.5 million an hour for the world's largest publicly traded oil company. ExxonMobil's revenue, which rose to $377.64 billion for the year, surpassing the record $370.68 billion it posted in 2005.
The profit bonanza followed a year of extraordinarily high energy
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prices as crude oil topped $78 a barrel in the summer – driving up average gasoline prices in the United States to more than $3 a gallon. Prices retreated later in the year. But ExxonMobil was able to maximize its flow of oil and natural gas to market when prices were highest.
The company said it ended 2006 with $32.8 billion in cash, and debt of $8.3 billion.
Some members of Congress have been calling for windfall profit taxes on energy companies which benefit greatly when oil prices climb and consumers got hammered by higher prices. No surprise that the oil companies have successfully fended those off. With a Democratic-controlled Congress, the effort could get more traction. Oil companies now are making a lot noise, though, saying that future results will be declining because of rising commodity prices, declining refining and chemical earnings, rising steel and labor costs, and higher royalties and taxes.
U.S. oil companies are in an interesting position, and will be for the next two decades. There is a rising tide of awareness by the public that the U.S. must accelerate alternate sources of energy. Oil companies like ExxonMobil all have investments in alternate energy, but are heavily incentivized to keep Americans as dependent on fossil fuels as possible. There is a vision on the part of environmentalists and some political leaders, however, to dramatically increase the demand of electricity for cars and homes, thus making utility companies much more competitive with oil companies for home heating and automobiles.
Alternate energy has largely been a hobby for the U.S. government and oil companies. But last year's spike in gas prices to nearly $4 per gallon in some markets, and the war in Iraq , seem to be forging a more resolute mission by consumers and government.
