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Exxon pulls out
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ExxonMobil, the largest publicly traded oil company in the world, is pulling out of the US gasoline market over the next few years. While the stations will still carry the Exxon or Mobil logos and pump their gasoline, the oil giant is looking to sell their US stations to private owners.
One analyst said that the current profits from Exxon’s retail unit are “somewhere close to a rounding error,” prompting the decision to follow competitors like Dutch Shell and British Petroleum out of the gas station business. While gasoline and convenience store sales are still enough to attract some small business owners, the profit margins have dropped too low for the large oil companies to retain interest.
Exxon spokeswoman Pam Nair called the current market “very, very challenging,” and noted that the best growth for the company lay in their refining and distributing capacities. Reuters.com reported that gasoline prices so far are up 31 percent from last year, while oil prices have nearly doubled.
This report comes on the heels of last month’s discussion of Exxon’s recent success. This year, Exxon reported record profits of $40 billion in 2007, up 3% from their (also record-breaking) 2006 profits. Oil companies composed three of the top five Fortune 500 companies in 2006, with ExxonMobil, Chevron, and ConocoPhillips placing second, fourth, and fifth respectively.
However, Exxon’s record profits may not indicate an increase in revenue, but a decrease in costs. Many of the costs associated with the oil business are front-heavy, since the investment in developing an oil field is drastically smaller than the continuing production costs. Most of the new oil fields have been discovered abroad, where nationalized oil companies control exclusive rights to development and production. This has blocked Exxon’s ability to invest in new fields, leading to a decline in overall operating costs—and an apparent, though deceptive, increase in profits.
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Soul searching
No, you’re making too much sense. Oil companies are just evil because they make a profit.
It’s amazing how many people think that way.
It would seem to me they need to find new markets to invest their profits in. Otherwise, they’ll fizzle out and die as their oil investments dry up.
Alternative energy, anyone?
It still amazes me that we have all the oil we’ll ever need (for the next 100 years, at least) sitting below the Rocky Mountains and off the shore of Florida, yet we’re still begging the Saudis to sell us more and more.
In three years we could have all the oil we need, and if we start building refineries now we’ll no longer have to worry about our economy being held hostage by the price of gasoline.
Goody goody!! With less suppliers providing gasoline, that will mean less visual pollution of gas station signs jutting up from the horizon or peaking from atop mountainside woods.
Less suppliers will mean it will not take as much time to choose which station to buy gas from. Less time deciding which competing gas station to buy from will be a major boon to consumers.
–taken from (I hope nonexistent) Democratic Talking points memo
Nice piece from American Thinker, titled “Thank you Big Oil”. It’s a good read.
http://tinyurl.com/69rjpu
The Real AJ:
Great Article! I wish it was published in every newspaper and magazine in the country! Then maybe it might wake some people up… But then again… probably not.
The oil companies pay more than 3 times their profits in taxes. We should want them to be profiting handsomely.