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KMorrill

Exxon

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Exxon reported it's earnings for the year: http://www.businesswire.com/portal/site/ex...sId=-2147483648

Some observations worth pointing out and concretizing:

  • Exxon reported net income of $40.6 billion over the past year. In the past year alone, they have grown profits by $900 million. To put just the $900 million of income growth in perspective, that's the entire profit from a company like Safeway that operates more than 1,700 stores and works all year to make that much. It took Safeway almost a century to grow from $0 to $900 million--Exxon did it in one year.
  • If you have a 401k, chances are you own shares of Exxon's stock and have benefited. The company's largest shareholders are companies like Barclays, Vanguard and Fidelity that manage mutual funds. Last year alone, Exxon returned $35.6 billion to investors. If you wrote that as a check to each of the 113 million household in the U.S. it would be $314--talk about a real economic stimulus package! Over the past 5 years, the company has more than doubled its overall value (i.e. market capitalization), creating over $200 billion in value to investors. Discounting PetroChina, which is a nationalized company, Exxon is the most valuable company in the world.
  • The company produces on average 6.5 million barrels of oil daily. After refining, this is enough gas to fuel the average daily driving of some 63 million people.
  • 5 years ago, the company was already one of the world's largest. In the past 5 years, they have managed to take an incredibly large company and double its revenue. During the same time, profits have quadrupled. Words alone could not convey how difficult it is to take a mega cap business like this and grow it. General Electric, another mega cap, has tried and grown revenues just 25% and income 56%--fantastic numbers, but pale in comparison.
  • Exxon is also fantastically efficient, employing 106,100 people. This sounds like a lot, but let's put that in perspective. McDonalds employs more than 4 times as many people, yet has less than a 10th the profit to show for it. Comparing inside the petroleum refining industry, it operates at a higher profit margin than most of its competitors--including BP, Chevron, Conoco, and Shell. Average revenue per employee is a staggering $3.8 million. Again to put this in perspective, Google--now famous for hiring geniuses--harnesses just 25% as much revenue from each employee.

I wrote this up as a letter to the editor for the Seattle Times, and it was published yesterday: http://seattletimes.nwsource.com/html/opin..._tuelets05.html

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Again to put this in perspective, Google--now famous for hiring geniuses--harnesses just 25% as much revenue from each employee.

That's very impressive indeed for Exxon!

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Thanks, Kevin, for the excellent analysis. I especially liked the following bit, which you excluded above (and they, in turn, excluded some of the excellent points you make above):

Blame our government, not Exxon, for higher gas prices.

For those paying with U.S. dollars, oil has quadrupled in price over the past four years. Four years ago, an ounce of gold would buy you roughly 12 barrels of oil; an ounce today would get you roughly 10.

I haven't heard it concretized in that way before and I think it's an excellent way to make the problem of inflation clear to the non-economist.

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And to those who complain about Exxon's "excessive profits", you could mention that Exxon also pays as much in taxes as the bottom 50% of the US population (65 million people) combined.

According to this page: " ... just one corporation (Exxon Mobil) pays as much in taxes ($27 billion) annually as the entire bottom 50% of individual taxpayers, which is 65,000,000 people! Further, the tax rate for the bottom 50% is only 3% of adjusted gross income ($27.4 billion / $922 billion), and the tax rate for Exxon was 41% in 2006 ($67.4 billion in taxable income, $27.9 billion in taxes)."

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And to those who complain about Exxon's "excessive profits", you could mention that Exxon also pays as much in taxes as the bottom 50% of the US population (65 million people) combined.

And surely the government knows better how to spend Exxon's $27 billion, than Exxon...

I wonder how much progress would be made on practical fusion devices, which would largely make moot all existing large scale power generation, if energy companies such as Exxon had that much more to invest?

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And to those who complain about Exxon's "excessive profits", you could mention that Exxon also pays as much in taxes as the bottom 50% of the US population (65 million people) combined.

And surely the government knows better how to spend Exxon's $27 billion, than Exxon...

I wonder how much progress would be made on practical fusion devices, which would largely make moot all existing large scale power generation, if energy companies such as Exxon had that much more to invest?

That is something that has always scared me... what if because of government intervention stifling nuclear research, there is no alternative energy when oil runs out? :)

From what I understand though, getting fusion to work is surprisingly closer than what you would think. But of course, they (fusion research groups) are having to fight over crumbs while billions of dollars are wasted building particle accelerators! One group is trying to completely revolutionize energy production for the planet, while the other is searching for a Higgs Particle...

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And to those who complain about Exxon's "excessive profits", you could mention that Exxon also pays as much in taxes as the bottom 50% of the US population (65 million people) combined.

Dear god, anyone who can keep an oil company afloat nowadays deserves a prize... they deserve every penny of that wealth, and much more.

My father is an independent oil producer in North Texas, and I can't even begin to explain all the red-tape he is put through. Incidentally, oil-businesses in Texas are regulated by the "Texas Railroad Commission", the very same kind of regulatory body which was responsible for the downfall of trains in America! So now that the skeleton of railroads have been pecked dry, that buzzard has moved on to businesses like my father's...

Notice that the same people who complain about oil companies gouging us will buy gasoline for $3/gallon, but then spend two dollars for 24 fluid ounces of bottled water! (there are 128 fluid ounces in a gallon)

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