Posted on 05/27/2004 10:20:30 PM PDT by NormsRevenge
DALLAS — Exxon Mobil Chairman Lee Raymond said that no matter how high gasoline prices may be at the pump, oil companies like Exxon take no more than 3 to 5 cents per gallon in profit.
"Most of the cost of the price of gasoline at the pump is for taxes and the purchase of crude oil, and we are by far the largest purchaser of crude oil in the world," Raymond said at a news conference after Exxon Mobil's annual meeting Wednesday at the Morton Meyerson Symphony Center.
Raymond said that while Exxon Mobil produces about 1 million barrels of oil per day, it has to buy enough crude to meet the 6-million-barrel capacity of its refineries, which exposes the company daily to crude prices that have topped $40 per barrel this month.
"If we're doing everything right, we may make a nickel per gallon," Raymond said.
The chairman declined to predict where crude oil and gasoline prices would go in the coming months. The U.S. average price of unleaded gasoline is above $2 per gallon.
"In 40 years we've been terrible at predicting prices," Raymond said. "Nothing's changed now, so I'm not going to start guessing."
During the meeting, Raymond defiantly proclaimed that "hydrocarbon fuels will predominate in the world through the middle of this century."
John Wilson of the Christian Brothers Investments Services of New York proclaimed the potential "catastrophic effects" of global warming as he introduced a resolution that would require the company to make available to shareholders all its relevant data on climate change and potential effects on Exxon Mobil.
But shareholders supported management's opposition, and the initiative received just 8.8 percent of the shares voted. Shareholders also defeated resolutions splitting the chairman and chief executive officer roles and one requiring that Exxon Mobil specifically cite gay men and lesbians in its antidiscrimination policy.
Raymond again fielded a variety of questions, many in the form of protests of company environmental and social policies, with little comment.
Of greater interest to shareholders was the presence of the new president, Rex Tillerson, who shared the dais with Raymond, 65, and was named to the board of directors. He has been considered Raymond's heir apparent since his appointment as president in February.
Tillerson, 51, confined his comments at the meeting and subsequent news conference to company financial and operational details. Raymond said only, in response to a question about his retirement and succession, that "when the board of directors wants you to know something about it, they'll tell you."
Saudi Arabia, the world's largest oil producer, said last week it would increase output of crude oil beginning next month, but other OPEC members have declined to publicly support an 8.5 percent increase in production quotas, and prices crept up again.
Raymond disputed the idea that Saudi Arabia has lost control over oil pricing. He also said there is adequate supply of crude oil for refineries around the world.
But Raymond said there would be little relief anytime soon from a refinery bottleneck.
"We haven't built a new refinery in this country for three decades, and that is due to both financial and regulatory concerns," Raymond said. "Refineries historically haven't made money, and I don't see a lessening of environment restrictions."
Raymond said that without the planned imports of liquefied natural gas from foreign sources to alleviate expected shortages of natural gas, "the users of natural gas in this country will be in a world of trouble."
Exxon Mobil is spending up to $15 billion for a giant liquefied natural gas operation in the Middle East kingdom of Qatar. But recent efforts to get permits for the huge seaside terminals for the fuels along the U.S. coasts have met with intense local opposition.
"It's the same as with a refinery," said Raymond. "Everybody says they need it, but nobody wants it built near them."
In response to a question, Raymond said he did not discuss a return of Exxon Mobil to the Saudi upstream market during a meeting with Saudi Oil Minister Ali al-Naimi when the two met at recent energy forum in Amsterdam.
The meeting attracted a smaller-than-usual number of protestors, who traditionally have gathered in front of the Meyerson venue before the session opened. Dallas police officers watched as fewer than a dozen protesters heckled a larger group of company supporters, made up largely of Young Conservatives of Texas.
"Nobody is organizing the annual meeting this year, and a lot of our efforts are going into antiwar activities," said Lon Burnham of Fort Worth, who works for the Dallas Peace Center.
Irving-based Exxon Mobil is coming off a record year, earning $21.5 billion last year.
Raymond boasted that the company has earned $74 billion in the last five years, equal to the profits of nearly 400 companies in the Standard & Poor's 500 Index.
Shareholder Brent Fryer of St. George, Utah, complained, however, that investors' return on Exxon Mobil stock has been much lower than others, such as Houston-based ConocoPhillips.
The Associated Press and Reuters contributed to this report.
(snip)
DALLAS - The chief executive of oil giant Exxon Mobil said Wednesday that the high price of gasoline is out of his company's hands and that political uncertainty in the Middle East will roil prices for the next several months.
Lee R. Raymond said Exxon Mobil, which earned $21.5 billion last year, makes about a nickel a gallon of gasoline at the pump.
``This notion that we're making dollars on gasoline; that's a long way from true,'' Raymond said. ``The two largest elements in the price of gasoline are the cost of crude oil and taxes. We're way down the list.''
(snip)
Raymond said crude prices were being pushed higher by uncertainty over the political situation in the Middle East ``and the high price of gasoline in this country pulls the crude price along with it.''
Demand for gasoline has increased in the United States, but refinery capacity has grown slowly in recent decades. Raymond said long-term profit margins in refining still don't look attractive enough to encourage new construction.
Asked where gasoline prices are headed over the next six months, Raymond answered: ``Up and down. You tell me what's going to happen in the Middle East and I'll give you an answer.''
Research shows this Lee Raymond could be a Rat.
$510 donation to Sen Lloyd Bentsen in '92.
source: http://www.newsmeat.com/fec/bystate_detail.php?st=TX&last=Raymond&first=Lee
My research shows that he gave $1000 to Bentson(d)Texas and $500 to Sen. Lugar(r)Indiana and $1000 to Congressman Don Young(r)alaska
http://www.opensecrets.org/indivs/search.asp?NumOfThou=0&txtName=Raymond%2C+Lee&txtState=%28all+states%29&txtZip=&txtEmploy=Exxon&txtCand=&txt1992=Y&txt1990=Y&Order=N
or a Texan.
Odd bit of trivia: Lloyd Bentsen beat GHW Bush in a Tex. election - mainly on the theme: "Bush is too liberal for Texas."
cool...thanks for the additional donation data.
I still want to know who is pocketing that extra 1/10 of a cent we pay for gas...
Nickle a gallon profit? Something tells me this guy is a liar.
These corporate boys usually cut checks to both sides, unless they are an idealogue like Turner or Soros.
I'm not so sure. That would be good income for retailers. But Exxon/Mobil sells how many gallons of gasoline in a year? Billions? And that is only part of what comes from crude oil.
The price of gas is high because of the steep decline in the value of the dollar over the past couple of years.
A nickel is about right. The numbers are in every financial newspaper, all over the Net, investigate for yourself. Look at crude prices, futures in gasoline, make estimates for transportation and refining. Done it myself. The math required is no harder than long division.
Reading this with a wry smile. Here in the UK fuel costs equivalent of $6.00 per gallon ;)
No, that's about right. Remember that refineries are in competition with each other. When I worked for a refinery, a nickel a gallon was the hoped-for goal for profitability.
The real rip-off culprits are the governments who suck upwards of $0.50 off of each gallon we buy. That's TEN times the profit of the producer!
<*ding!*> We have a winner!
For those who don't know...most of that comes from upstream operations (drilling and selling of crude oil into the market) not downstream (retail MOGAS sales to people like you and me).
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