Reid Calls Oil Profits 'Backhand to the American People'

July 7, 2008 - 7:23 PM

(CNSNews.com) - After ExxonMobil Corporation announced on Thursday that it had made a profit of $10.36 billion during the second quarter of 2006 Senate Minority Leader Harry Reid (D-Nev.) called the oil company's profits "shocking" and part of the GOP's "backhand to the American people."

But on Wall Street, the ExxonMobil second quarter performance drew raves. One investment professional pointed to the record-setting earnings and said Americans should invest in the company.

Reid, however, was focused on the price at the pumps.

"Americans are paying near-record gas prices, oil companies are reaping billions in profits, but the response from the oil men in the White House and the Republicans in Congress has been billions for Big Oil and a backhand to the American people," Reid stated in a press release.

"It would be shocking in normal times, but it is standard procedure for Republicans in Washington," he added.

"It is time for a change from the Bush/Cheney energy plan that put Big Oil's interests ahead of working families," Reid noted. "For five years, this Republican Congress has failed to adopt a forward-thinking plan to deliver affordable and clean energy and it is time for a new direction."

As an alternative, the Nevada senator pointed to the Democrats' proposed Clean EDGE Act - which is intended to promote alternative sources of energy and reduce U.S. consumption of oil to 6 million barrels a day by 2020. Reid called it "the comprehensive legislation needed to address the current energy crisis and the right way to help the American people."

Reid's comments came just hours after ExxonMobil -- the world's largest oil company by market capitalization - announced the second-largest quarterly profit ever recorded by a publicly traded company in the U.S.

ExxonMobil Chairman Rex Tillerson stated that the corporation's net income for the period from April through June was up 36 percent from the same period in 2005 and production increased 6 percent on an oil-equivalent basis as well.

Although much of the profit was attributed to the near-record cost of fuel, the news still sent ExxonMobil shares to their highest level ever and helped lift stocks higher in early Thursday trading.

Other oil companies also had a profitable second quarter. Royal Dutch Shell stated on Thursday that earnings during that period jumped 40 percent to $7.32 billion. Earlier in the week, British Petroleum reported its profit climbed 30 percent to $7.3 billion, and Houston-based ConocoPhillips announced that earnings rose 65 percent to $5.18 billion.

Nevertheless, environmental and public interest activists focused their criticism Thursday on ExxonMobil mostly due to the company's size and alleged lack of investment in renewable fuel sources, such as wind or solar power.

"As many are struggling with record energy prices, Exxon is posting record profits," said Shawnee Hoover, campaign director for the national Exxpose Exxon campaign.

"We're finding that just one month of Exxon's profits, invested in alternative fuels, would double the annual investment of the federal government in renewables, fuel efficiency and alternative energy," Hoover added.

"The repeated record profits of Exxon and all of the other major oil companies should refuel the outrage of motorists who are still paying $60 to fill up the minivan," said Judy Dugan, research director of the Foundation for Taxpayer and Consumer Rights (FTCR).

"These oil giants are profiting once from the sale of crude oil at record prices and again from refining profits of 43 cents per gallon of gasoline, an amount for which there is no possible justification," Dugan stated.

"Refining profits at this level are pure greed and the real explanation for outrageous prices at the pump," she noted. "It's not Mideast unrest, shortfalls in Nigerian output or any of the industry's other so-called reasons for gasoline prices that remain 72 cents higher than they were in January."

However, Kimberly DuBord, an investment analyst with Briefing.com, suggested a different response to what she called "Another Blowout Quarter for Exxon." DuBord said Americans would be wise to invest in the company.

"The three largest oil and gas producers in the world generated profits of nearly $23 billion in the second quarter," she noted, and Thursday's news marked "the first time in history that a U.S. company exceeded $1 billion per day."

DuBord recommended that people who like "consistent earnings, leading returns, superior financial strength, highly integrated business model, positive earnings momentum and an expectation of aggressive buybacks" invest in ExxonMobil.

As Cybercast News Service previously reported, ExxonMobil has faced increasing criticism from activists this year.

When the company earned profits of $8.4 billion during the first quarter of 2006, that amount was not enough to meet Wall Street expectations but was nevertheless criticized as too much by Exxpose Exxon.

Activists from environmental and public interest groups gathered in Dallas in late May to call on ExxonMobil shareholders to clean up what they referred to as the corporation's "dirty practices." The protestors accused the company of making $7 billion in "unearned profit" from the war in Iraq.

During the annual shareholders' meeting the following day, the company shrugged off the activists' complaints and re-elected its board of directors to a new one-year term.

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