Where will big oil's big profits go?

[Omaha Steve]

Full article: http://www.csmonitor.com/2006/0728/p01s03-usec.htm


rom the July 28, 2006 edition - http://www.csmonitor.com/2006/0728/p01s03-usec.html
Where will big oil's big profits go?
Exxon Mobil says some windfall will go to more drilling.

By Mark Trumbull | Staff writer of The Christian Science Monitor
After a particularly heady gush of oil- company profits, everyone from industry executives to international energy policymakers seems to be asking the same question: What should be done with all that cash?

The scale of the windfall is stunning: Exxon Mobil reported Thursday $10.36 billion in quarterly profits for the three months ending June 30. The results beat Wall Street expectations and marked, according to the Associated Press, the second-highest quarterly profit in history. The highest ever? Exxon's $10.71 billion in the fourth quarter of 2005.

It's an industrywide earnings bonanza built on the very thing - rising oil prices - that have been a source of growing consumer anxiety during a summer of $3-a-gallon gasoline.

"They're just benefiting from a strong commodity cycle and doing a very good job of it," says Lysle Brinker, an analyst with energy research firm John S. Herold. "But they don't operate in a vacuum and they realize that. They're going to get tons of spears and blow darts from political and consumer groups."

The report puts oil companies in an embarrassment-of-riches quandary. The profit surge, coupled with fears that high oil prices may be here to stay, adds political pressure to an industry that rarely wins popularity contests.

[SmokingJacket]

1. Would be nice if they decided to put it into alternative energy.

It would also be smart, from a long-term perspective. But "nice and smart" don't carry much weight these days.

[Vincardog]

2. They will increase until the Greedy Oil Party is disgraced and replaced

[Dr.Phool]

3. They'll use it to buy each other out.

Then they can "consolidate", meaning shut down more refineries, like they've been doing for the last 15 years, and increase both shortages and profits.

Then they can buy more tax breaks from Congress, and a few more CEO's can retire with a Fort Knox sized pension package.

[unc]

4. .

Then they can "consolidate", meaning shut down more refineries, like they've been doing for the last 15 years,

Wow, that's odd. Last time I checked, refining capacity has increased in the past 15 years, despite every energy analyst forecasting that demand would not even increase. Odd, isn't it?