Exxon Mobil's Riches: Fueling Controversy?

A full-page ad in the New York Times on January 26, 2006, posted by the American Petroleum Institute (API) was aimed at convincing the public that the US$ 10.7 billion fourth quarter profits of Exxon involved a reasonable rate of return. The ad displayed a chart showing how many cents of profit various industries had made over the previous five years for each dollar of sales (Refer to Table V for cents earned per dollar of sales for different industries).

The ad went on to say: "What many may find surprising is that, on average over the past five years, the profitability of America's oil and natural gas industry is far less than many other major industries, like banks, pharmaceuticals and real estate"...

There were already bills moving through the US Senate to limit oil company mergers in the future or reduce some of their earnings through a windfall profits tax. Some analysts felt that Exxon could face increased regulation and a windfall profits tax if the Democrats won control of the House or Senate in the election to be held in November 2006.

Wall Street analysts expected that in 2006, Exxon would spend approximately US$ 15 billion on exploration and production, buy back at least US$ 20 billion in stock, and pay US$ 8 billion in dividends. However, Exxon's biggest challenge would be fulfilling its promise to increase output from 4.1 million barrels a day to 5 million by 2010...