Oil Companies Report Record Third Quarter
Exxon Mobil Corp., Chevron Corp. and Texaco Inc., the three largest U.S.-based oil companies, reported record profits for the third quarter thanks to the high price of oil, gasoline and natural gas.
The announcements, coming a week after Chevron of San Francisco and Texaco of White Plains, N.Y., unveiled their $35-billion merger plan, are sure to rekindle ire among consumer advocates and some legislators at the size and origin of oil company profits.
As in the first two quarters of the year, the latest quarter saw all three companies earning more from finding and selling oil and natural gas. But unlike previous quarters, this time Exxon Mobil and Chevron reported sharply higher earnings from the refining and marketing of gasoline, diesel and jet fuel. The companies noted that earnings from refining and marketing were depressed in the third quarter of 1999.
“There have been enormous windfall profits from most of these companies this year,” said Wenonah Hauter, director of energy and environment for the watchdog group Public Citizen. “It’s generally not good for consumers, and I think the consolidation that we have seen in the industry and will continue to see will further impact consumers.”
California Atty. Gen. Bill Lockyer said his office will scrutinize the proposed merger of Chevron and Texaco to make sure it would not reduce competition in the state. Chevron is the No. 2 gasoline retailer in California, and Texaco, through a joint venture with Shell Oil Co., is No. 4.
“We will continue to work closely with the Federal Trade Commission and others that are reviewing oil company practices. However, my belief is that they don’t need to actively break the law to make these kinds of profits,” Lockyer said in an interview. “The demand for their product is so inelastic that they can continue to run up the prices without losing market share.”
Irving, Texas-based Exxon Mobil’s third-quarter earnings nearly doubled, Chevron’s more than doubled and Texaco’s increased 80%, surpassing the consensus forecasts of industry analysts.
The stock price of each company, however, fell on the New York Stock Exchange. Shares of Exxon Mobil dropped $2.31 to $86.75, Chevron slipped 31 cents to $82.25 and Texaco lost $1.06 to $58.06.
At Exxon Mobil, profit from operations rose to $4.29 billion, or $1.22 a share, from $2.21 billion, or 62 cents, a year earlier when Exxon and Mobil were separate companies. Revenue rose to $58.9 billion from $49 billion.
Chevron reported operating profit of $1.65 billion, or $2.53 a share, up from $702 million, or $1.07, a year ago. Revenue increased to $13.6 billion from $10.2 billion.
Texaco’s operating profit rose to $815 million, or $1.49 a share, from $453 million, or 83 cents, a year earlier. Revenue increased to $13.4 billion from $9.68 billion.
Bloomberg News was used in compiling this report.
