......"You really don't understand how capitalism works, do you?
It's like this:
We want the oil companies to build more refineries, and to upgrade the ones they have to make them more efficient, right?
Well, the way they do that is by investing; "investing" means "spending money," and the only way you can do that is if you have profits, i.e., money earned from sales.".....
I wish that this is what they are doing with the added profits.
But XOM has not added to exploration, or to building plant. They are in a huge stock buyback mode, spending over $13 billion so far this year buying back their stock at the highest market price the stock has ever reached. They are now committing $5 billion buyback for the next quarter, based on the strong 3Q profits.
It is really a shame that the best investment that XOM can find for their current $29 billion in cash hoard is to retire stock that is paying a 2+% dividend.
But whatever they can do to goose earnings per outstanding share will juice the stock price. And since Fatcat Chairman Raymond, 66 years old, owns over 4.5 million shares, each dollar the market price goes up, he makes another $4.5 million toward his retirement (on top of his retirement pension of $6.5 million per year) That's a portfolio even Anna Nicole Smith could fall in love with.
That is not true. ExxonMobil is expanding the exploration and production of heavy oil on the North Slope. Oil companies are continually expanding. Oil fields naturally deplete and produce less oil each year without expansion. They have to increase production through new wells or additional facilities just to stay even.
A little further information:
ExxonMobil continued its active investment program in the third quarter, spending $4.4 billion on capital and exploration projects, bringing the year-to-date spending to $12.4 billion, an increase of $1.7 billion versus 2004. Our disciplined project management systems remain a competitive advantage, delivering new supplies of crude oil to the global market.
Their shareholders bore a lot of risk. It's perfectly reasonable to have cash returned to them. Buybacks are the most tax-efficient way of doing it.