The LA Times Business Section has a
column 1 article today about how Exxon is moving, before the report of their yearly numbers, to head off backlash from consumers and politicians.
Exxon Mobil Vice President Ken Cohen acknowledged that when the company and its industry brethren post fourth-quarter and full-year 2005 earnings -- a process that begins next week -- the results probably would trigger public outrage. That's what oil companies got when they reported record profits for the third quarter, a period that included post-hurricane gasoline prices above $3 a gallon.
More on the greedheads, and a modest proposal, on the flip...
"Many people say that the energy industry is reaping unfair profits and that consumers are paying the price," Cohen said. "But one has to have a point of reference. The reason that energy industry earnings are so high is that our business is immense."
Profits are so high because the business is immense? Huh? Sure, total profits are related to the size of the business. If you make a nickel on each widget, it follows that you make a higher total profit if you sell ten million widgets. No problem.
BUT this is pure bullshit of the kind we've come to expect from these oil guys (and Republicans I probably needn't point out). To wit: Exxon's numbers are expected to be
30% higher than 2004's profits, the previous record!
On Jan. 30, the company is expected to post 2005 operating profit of around $5.14 a share, or about $32 billion, up 30% from its record 2004 results of $3.97 a share, according to company data and a survey of analysts by Thomson Financial. Analysts on average expect Exxon Mobil to report fourth-quarter operating profit of $1.44 a share, an amount that would eclipse year-earlier results as well as third quarter 2005's operating profit of $1.32 a share.
During the quarter ended Sept. 30, Exxon Mobil reported net income of $1.58 a share, or $9.9 billion. Third-quarter sales topped $100 billion, and if Exxon Mobil's fourth-quarter results are similar, as expected, the oil giant's 2005 revenue could exceed that of retail giant Wal-Mart Stores Inc.
Even with escalating hurricane repair costs cutting into its results, the oil industry will report earnings 5% above the stellar third quarter, Friedman Billings Ramsey analyst Jacques Rousseau said in a Jan. 10 report. Rousseau said he hiked his earnings estimates for most oil companies after the cost of crude oil shot back up in the last half of December.
"All these companies will make more money than they have made in any quarter in their history," said Fadel Gheit, an analyst at Oppenheimer & Co.
And they expect us to swallow that these outrageous profits are not windfall. You know, they're right! These profits are NOT windfall, they're RIPOFF!
OK, enough rant. Here's my modest little idea...
Exxon's concept is to "soften the field" before the release, attempting to cool consumer anger, but more importantly, to neutralize the potential political call for a windfall profits tax, consumer price relief, or some other legislated action on behalf of consumers.
The event was part of a renewed effort to bolster the industry's image and to calm politicians considering a windfall profits tax and other legislation that oil companies oppose.
"They're trying to do what they can to frame the way people respond to [the profits], and that's a reasonable strategy," said Barbara Kahn, a marketing professor at the University of Pennsylvania's Wharton School. "Whether or not it's effective is a different matter."
I propose we do some PR work of our own, grassroots-style. How about a call for some guerrilla marketing to stir up anger at the oil companies over their obscene profits as they report them, and to push our "leaders" into calling for, and taking action for, price relief, windfall profit tax, and hearings (under oath this time, please) in Congress. Even if it's in the basement cause the meeting rooms are "too busy" again.
What if we all lobbied our state reps to have local hearings...make the story play locally as well.
What if we called a nationwide boycott of gas stations to protest the obscene profits of the oil companies? (Yes, I know gas station boycotts don't work, but it's really good street theatre and it gets local news air time and page space.)
It's been said over and over: economic issues bring greed and incompetence home to middle America. This is greed on steroids, and it can be dropped right into the oil guy's laps. Who happen to be in the White House.
Comments?