Remember when Exxon Mobil (NYSE: XOM) was the symbol of all that was evil in corporate America? Remember when people were pawning their jewelry to buy gas? Remember when politicians spoke of a windfall profits tax? Well, move over Wall Street, the largest publicly traded oil company is back again to grab some of the negative publicity.
The company reported $45.22 billion in profits last year, the largest ever for an American corporation. The results beat Exxon's previous record. Exxon spent $40 billion on dividends and share buybacks.Before people start booing, there is some "good" news. Exxon's fourth quarter profit fell 33% to $7.82 billion, or $1.85 per share. The "bad" news is that the results were 8 cents better than analysts surveyed by Bloomberg News expected. Revenue plunged 27% to $84.7 billion on lower oil prices. Competitor Chevron Corp. (NYSE: CVX) also reported better-than-expected earnings.
Exxon's strength continues to inspire confidence in investors who have seen other major energy companies, such as ConocoPhillips (NYSE: COP), post disappointing results. As Bloomberg News notes, Exxon is taking advantage of the economic downturn by boosting capital spending by as much as $5 billion.
Investors are snapping up shares of Exxon even as drivers curse the company's name under their breath. The company's reputation probably will be damaged further since oil prices are expected to rise once OPEC's production cuts take hold. Eventually, gasoline prices will follow suit. In fact, gasoline prices are already rising from their lows.
Exxon's current profit record is sure to be broken. People will be outraged again by the price to fill up their tanks and demand a pound of flesh from big oil. I think that raising taxes on petroleum producers in a recession is a mistake and will do nothing to lower energy prices.
People mad at the oil companies can always drive less or conserve energy. It's a more effective way to "stick it" to these hated companies than punitive taxes.
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