And, profit is not immoral.
I just got off a conference call with Ken Cohen, VP of Public Affairs for ExxonMobil. The subject, of course, was gas prices issue and the MSM/political distortion thereof.
The call was long, lively, and productive. Cohen gave time for each blogger to ask two and three questions, so I won't write it all up right now, but I'll hit some high points.
On the current controversy:
"One thing it has driven home to me...is we need to do a better job about explaining to people just how we go about making out money and that we earned it."
Why the spike?
"What has been unanticipated...has been the unprecedented economic growth in the developing world."
On the refinery shortage:
"Bringing an oil refinery online...is a Herculean process...you’re looking at 5 to 6 years in the construction of a grassroots refinery... Assuming we could get the approvals, heroically, in 5 years... We've been expanding our existing capacity...we've been able to do the equivalent of building two new refineries in the U.S."
On prices as market signals:
"We have high prices but what we have today is the market sending signals that something needs to be done...These price signals are telling refinery operators, 'Take a look at expansion'...Consumers are getting a signal that efficiency is important, automakers are getting a signal."
On price-gouging:
"As to the specific allegation of price-gouging, we don't. ..We are the most regulated industry in the nation...If called, we'll appear and we'll testify and I can tell you what the answer will be-- there is no price gouging."
On Schumer saying there's not enough competition in the industry:
"Well, he’s wrong. I think he was speaking in terms of gasoline sales in the United States. The gasoline market is highly competitive...you have the majors owning less than they did 5 years ago...ExxonMobil has a smaller market share than the two companies did pre-merger."
On profit margins:
Exxon's 2005 figure was 9.7 cents on the dollar. That puts the company at No. 116 on the Fortune 500 in that category.This year in the first quarter, though earnings went up, the profit was 9.4 cents on the dollar.
On taxes (this one'll take your breath away):
In the first quarter of 2006, ExxonMobil made:
Total earnings: $8.4 billion U.S. earnings: $2.3 billion U.S. tax incurred: $3.7 billion
Seriously, I couldn't believe it when he said it, but he confirmed it several times. The company is sending numbers on it.
I asked what he considers the top 3 misconceptions about the oil industry:
People don't understand the enormity of the business. ExxonMobil produces just 3 percent of the world's oil. We need to explain the commodity nature of the business. Folks need to understand that things aren't done with the flip of a switch in the oil industry. It is not strange for a project to take a decade to get started and 30 years to complete. It's a long-term business. Oil executives are not capriciously messing with prices at the pump.
Interesting stuff.
Others writing it up:
Capt. Ed, Flip, Lorie, Pat Cleary, Rob Bluey, Kim, Peyton Knight at the National Center Blog, and John Hawkins.
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