Exxon Mobil/Esso sets profit record

Exxon Mobil/Esso Corp. set U.S. records for annual and quarterly profits Monday as it easily topped fourth-quarter earnings forecasts.

US largest oil company reported net income in the fourth quarter of $10.7 billion, or $1.71 a share, compared to $8.4 billion, or $1.30 a share, a year earlier.

Excluding items, Exxon Mobil/Esso earned $10.3 billion, or $1.65 per share, topping a consensus forecast of $1.44 a share from analysts surveyed by earnings tracker First Call. It also topped the record for quarterly profits it set in the third quarter, when it earned $9.9 billion.

Shares of Exxon MobilEsso gained 2 percent in early-afternoon trading, helping to take the Dow into positive territory.

For the year the company earned net income of $36.1 billion, or $33.9 billion excluding special items. That's up 31 percent from the $25.9 billion it earned on that basis year earlier.

Exxon Mobil's 2005 net income for the year comes to $1,146 a second. That per-second profit is enough to pay for gas for the average American vehicle to be driven 10,294 miles, at current gasoline prices.

While oil and gasoline prices in the fourth quarter were down from the levels seen in September, that barely dented Exxon Mobil's top line. Revenue for the quarter was $99.7 billion, up from $81.9 billion in the year-earlier quarter, and down only 1 percent from the $100.7 billion in revenue in the third quarter. Full-year revenue came to $371 billion, or just over $1 billion a day.

The Exxon Mobil earnings statement was almost defensive about the record profit.

"There is a great deal of public interest in global energy prices," said a statement attributed to Exxon Mobil Chairman Rex Tillerson. "We recognize that consumers worldwide want and need reliable supplies of affordable energy -- to fuel their vehicles, light and heat their homes and run their businesses. Our strong financial results will continue to allow us to make significant, long-term investments required to do our part in meeting the world's energy needs."

Henry Hubble, Exxon Mobil's vice president of investor relations, told analysts and investors during a conference call that the company had returned about $23 billion to shareholders in 2005 through dividends and share repurchases. The company raised its dividend to 32 cents in the first quarter from 29 cents in the fourth quarter. The company has increased its dividend for 29 consecutive years.

"Our earnings reflect our ability to capture the strong industry condition. More importantly they highlight the things we do exceptionally well," Hubble said, detailing work to deliver strong operating margins and its investment strategy.

Fadel Gheit, oil analyst with Oppenheimer, said the company beat expectations by recovering faster than expected from the hurricanes that hit the Gulf Coast near the end of the third quarter and by posting strong margins in its refining and marketing units, the side of the oil business that can often be squeezed by higher oil prices.

Despite the company record cash flow and a strong cash position on its balance sheet, he doubts the company will use any of its wealth to buy other companies as some competitors have done. Company officials have said they don't want to buy oil assets at current prices but Gheit said he thinks there are also political reasons behind their reluctance.

"That would invite unnecessary and unwanted scrutiny of Exxon," he said.

As to the Exxon Mobil's earnings record, First Call could not definitively say what was the largest annual profit on record. But it appears the previous mark was held by Media One, the cable television operator that eventually became part of Comcast. It posted net income of $26.3 billion in 1998.

But most of that profit came from accounting of a split between cable and telephone units that took place over the year. Media One's income from continuing operations that year came to only $1.4 billion.

The largest operating income before this year may well have been Exxon Mobil's $25.9 billion in 2004.

Of course Exxon Mobil isn't the only oil company reporting sharply better results. The 12 U.S. oil companies in the S&P 500 that have reported fourth-quarter results have seen an average of a 48 percent rise in earnings excluding items in the period, according to First Call.

The list includes most of the large U.S. oil companies, including No. 2 Chevron and No. 3 ConocoPhillips. But it does not include major foreign-based oil companies such as Royal Dutch Shell or BP, which both have extensive U.S. operations.

The oil companies in the S&P are expected to see full-year earnings of $96.5 billion, when combining reported results and forecasts for the companies yet to report. That also would be up 48 percent from a year ago. And the profit growth is not nearing an end, with analysts surveyed by First Call looking for 15 percent growth in earnings at those companies in 2006.

Strong oil earnings in the third quarter prompted calls in some quarters of Congress for a so-called "windfall profit" tax on oil company earnings, as well as a joint hearing of the Senate Energy and Commerce committees into earnings from big oil. Lee Raymond, who retired as Chairman and CEO of Exxon Mobil in December, was one of five executives from big oil called to testify.

The various windfall profit tax proposal by Sen. Byron Dorgan, D-N.D., failed on when offered as an amendment in the Senate in the fall. Gheit said he doesn't believe that there will be much revival of the talk of a windfall profit tax now despite the new record profit.

"People don't look at oil profits, they look at prices at the pump," he said.

The average price of a gallon of unleaded regular gasoline retreated from the post-Hurricane Katrina record high of $3.057. But after oil and gasoline prices are rising again, with the AAA average showing a nearly 7 percent gain over the last month.

Sheraz Mian, oil analyst for Zack's, agreed the lower gasoline has reduced the pressure for a tax on oil companies, but he's not convinced the companies are out of the woods yet.

"I would not completely rule out noise on this in the next few weeks," he said. He agreed with analysts who see even higher oil profits ahead in 2006. Both he and Gheit have a buy recommendation on Exxon Mobil shares, with Mian having a $70 a share target price.

"We don't see '05 as the peak. We believe '06,for now, looks to be better," he said.

CNN

Ready for $262 a barrel oil prices ?

"I'm very worried about the supply-demand balance, which is very tight," billionaire investor George Soros says.

"U.S. power and influence has declined precipitously because of Iraq and the war on terror and that creates an incentive for anyone who wants to make trouble to go ahead and make it."

"Iran is on a collision course and I have a difficulty seeing how such a collision can be avoided,"

To come up with some likely scenarios in the event of an international crisis, his team performed what's known as a regression analysis, extrapolating the numbers from past oil shocks and then using them to calculate what might happen when the supply from an oil-producing country was cut off in six different situations. The fall of the House of Saud seems the most far-fetched of the six possibilities, and it's the one that generates that $262 a barrel.

More realistic -- and therefore more chilling -- would be the scenario where Iran declares an oil embargo a la OPEC in 1973, which Browder thinks could cause oil to double to $131 a barrel. Other outcomes include an embargo by Venezuelan strongman Hugo Chavez ($111 a barrel), civil war in Nigeria ($98 a barrel), unrest and violence in Algeria ($79 a barrel) and major attacks on infrastructure by the insurgency in Iraq ($88 a barrel).

Regressions analysis may be mathematical but it's an art, not a science. And some of these scenarios are quite dubious, like Venezuela shutting the spigot. (For more on Chavez and Venezuela, click here.)

Energy chiefs at the World Economic Forum in Davos downplayed the likelihood of a serious oil shortage. In a statement Friday, Shell's CEO Jeroen Van der Veer declared, "There is no reason for pessimism." OPEC Acting Secretary General Mohammed Barkindo said "OPEC will step in at any time there is a shortage in the market." But then no one in the industry, including Van der Veer, foresaw an extended run of $65 oil -- or even $55 oil -- like we've been having.

It's clear that there is very, very little wiggle room, and that most consumers, including those in the United States, have acceded so far to the new reality of $60 or even $70 oil. And as Soros points out, the White House has its hands full in Iraq and elsewhere.

Although there are long-term answers like ethanol, what's needed is a crash conservation effort in the United States. This doesn't have to be command-and-control style. Moral suasion counts for a lot, and if the president suggested staying home with family every other Sunday or otherwise cutting back on unnecessary drives, he could please the family values crowd while also changing the psychology of the oil market by showing that the U.S. government is serious about easing any potential bottlenecks.

Similarly, he could finally get the government to tighten fuel-efficiency standards and encourage both Detroit and drivers to end decades of steadily increasing gas consumption. These kinds of steps would create a little headroom until new supplies do become available or threats like Iran's current leadership or the Iraqi insurgency fade.

CNN

Canadian Oil Prices Climb for a Second Day

Crude oil for March delivery advanced as much as $1.05, or 1.6 percent, to $67.31 a barrel on the New York Mercantile Exchange. Oil reached $69.20 earlier this week, the highest in more than four months.

Thirty-one of 53 analysts surveyed by Bloomberg, or 58 percent, said oil prices will rise next week. Nine forecast prices will decline and 13 expected little change. Last week, 53 percent said prices would increase.

Bloomberg

Oil tops $68 on threats

Oil prices zoomed to a four-and-a-half month high above $68 (U.S.) a barrel on Jan 20, 2006, rallying on supply fears tied to Iran's tense diplomatic standoff with the West over its nuclear ambitions.

Labor unrest in oil-rich Nigeria and new threats from al-Qaeda contributed to traders' jitters at a time when global petroleum demand is high and the emergency supply cushion is thin, leaving little room in the event of an output disruption.

Analysts said speculative buying by hedge funds and commodity funds also buoyed crude futures, which settled at their highest level since Sept. 1, just days after Hurricane Katrina made landfall.

TheGlobeAndMail

Crude-oil prices rose

Crude-oil prices rose to $66 on worries that possible sanctions against Iran, over its nuclear ambitions and political unrest in Nigeria could threaten global oil supplies.

Liberals gas tax revenue deal not for canadien

Martin promised to lock in the federal gas-tax transfer permanently (five-year deal) for municipalities only.

BrandonSun

Crude prices surge

Crude-oil prices spiked past $65 (U.S.) a barrel Tuesday as Iran's nuclear ambitions and an attack on an oil platform in Nigeria kept traders edgy over potential supply snags.

TheGlobeAndMail

Brazil uses more of sugar to make automotive fuels

Brazil is converting more sugar into ethanol fuel after gasoline prices jumped to a record. A drought in Thailand, once the world's second-biggest exporter, and the prospect of reduced European Union exports are adding to the supply squeeze, raising costs for companies including cereal maker Kellogg Co. and Coca- Cola Co., the world's largest producer of soft drinks.

BloombergNews

Ottawa studies ratings accuracy

"Transport Canada is currently studying the new EPA fuel economy rating system. We do think the development of accurate fuel consumption testing methods and reporting can only benefit our interaction and transparency with the Canadian public." said Robin Browne, a senior communications adviser at Transport Canada. But Ottawa doesn't have enough resources for checking all models. :(

Gas prices keep inflation rate down

Cheaper gasoline at the pumps helped reduce the annual inflation rate to 2% in November but analysts say that won't keep the Bank of Canada from raising interest rates in the year 2006.

GasPricesInOttawa.com

Ottawa Traffic Cameras Widget

The City of Ottawa uses video cameras to monitor traffic at various intersections throughout the city. The video is sent to the Traffic Control Center where traffic operators can modify the timing of traffic signals when congestion from high traffic volumes, collisions, or construction occurs.

The top left & right yellow arrows inside the frame will allow you to change camera manually.

A complete intersection list can be found in the Widget Info.

It also displays the best gas price in Ottawa from www.GasPricesInOttawa.com, as well as weather information.

Start the engine

GasPricesInOttawa.com just started new blog about gas prices in Ottawa
Thank you everybody!