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Exxon Mobil's Profits Up 7 Percent, Fueling Anger

Posted on: Thursday, 27 April 2006, 21:00 CDT

FORT WORTH, Texas _ Exxon Mobil Corp. boosted its first-quarter profit by 7 percent to $8.4 billion, or $1.37 per share, Thursday, setting off another round of calls for investigations of oil company profits and possible price gouging as well as calls for a windfall-profits tax.

The quarterly results were a mild disappointment to Wall Streeters accustomed to double-digit year-over-year profit increases for the past two years, sending Exxon Mobil's stock down 6 cents to $62.36 per share on the New York Stock Exchange.

But frustration over high gasoline prices _ such as the 77 cents a gallon increase in the past year reported by AAA Texas on Thursday _ prompted the Senate Finance Committee to promise a "comprehensive review" of federal taxes paid by major oil companies.

Additionally, the Senate Judiciary Committee voted to allow the Justice Department to prosecute officials of the Organization of Petroleum Exporting Countries for price-fixing in violation of antitrust laws.

Sen. Dick Durbin, D-Ill., conceded in comments to The Associated Press that "we are venting our frustration" and acknowledged the unlikelihood that the foreign oil barons could be hauled before a congressional committee.

Senate Republicans responded with a proposal for sending a $100 rebate check to taxpayers to counter higher gasoline prices in return for opening up the Arctic National Wildlife Refuge to drilling. Sen. Bob Menendez, D-N.J., proposed a 60-day suspension of the 18.4 cents a gallon federal gasoline tax, a move he said would provide immediate relief of $100 million a day for motorists.

Exxon Mobil again found itself defending its profits. "We sympathize with consumers paying high gasoline prices," spokesman Mark Boudreaux said. "We are trying to help public policymakers understand what makes prices high."

Texas Railroad Commissioner Michael Williams said Congress needs to open the Arctic National Wildlife Refuge to drilling.

"If we had begun drilling there 10 years ago as proposed, ANWR production alone would pump about 1 million barrels daily into the market, approximately the same amount of crude produced in all of Texas," he said.

Bee County Judge Jimmy Martinez proposed more localized action, asking residents to boycott local Exxon Mobil stations.

"We're in a crisis. This is absolutely a crisis," Martinez told a local TV station. He said Exxon Mobil should be boycotted until prices return to $1.30 a gallon.

Exxon Mobil's Boudreaux responded to the irritation about high gas prices by saying, "The main factor in gasoline prices is the global oil markets."

As for calls for a windfall-profits tax or other levies against oil companies, Boudreaux cited a Congressional Budget Office study showing that the 1970s-era windfall-profits taxes on oil companies resulted in a decline in investment and production.

"We are increasing our capital expenditures by 41 percent this year, as part of a long-term plan," Boudreaux said.

Exxon Mobil has signed agreements with Abu Dhabi National Oil Co. for a 28 percent interest in the Upper Zakum oil field, which Exxon Mobil said has a target production of 750,000 barrels daily.

The company also signed a joint operating agreement with PT Pertamina for the Cepu, Indonesia, area, which is expected to produce 165,000 barrels a day.

For the first quarter ended March 31, Exxon Mobil's revenue rose to $89 billion, from $82 billion in the 2005 first quarter.

Exxon Mobil's continued trend of shifting its energy production overseas was demonstrated by its gain in non-U.S. oil and gas revenue to $5.1 billion this year from $3.7 billion a year earlier. Domestic oil and gas production revenue dropped to $1.3 billion in the latest quarter from $1.4 billion last year.

"The domestic decline is due to declining production in mature fields and divestitures of properties," said Henry Hubble, Exxon Mobil director of investor relations, who conducted a conference call with analysts to discuss the results.

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(c) 2006, Fort Worth Star-Telegram.

Visit the Star-Telegram on the World Wide Web at http://www.star-telegram.com.

Distributed by Knight Ridder/Tribune Information Services.

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GRAPHIC (from KRT Graphics, 202-383-6064): 20060427 Exxon earnings

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Source: Fort Worth Star-Telegram (Fort Worth, Texas)

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