By Ben Geman - 04/28/11 01:08 PM EDT
Oil giant Exxon Mobil Corp. reported a $10.65 billion first-quarter profit Thursday, a 69 percent jump from the same period last year that will likely fuel political battles over U.S. oil-and-gas policy.
The company is benefiting from higher refining margins, but also a surge in the price of oil that has led to $4 per gallon gas prices in the U.S. It's also made oil companies a rich political target for the White House.
Exxon’s profits are its highest since its record in 2008, when it posted profits of $10.9 billion in the first quarter, $11.7 billion in the second quarter and $14.8 billion in the third quarter (and $45 billion for the year).
Major oil companies including Shell and ConocoPhillips are also reporting profit growth this week — earnings that are driving a fresh push by the White House and Capitol Hill Democrats to repeal an array of tax breaks that the administration says would be worth $4 billion in the first year.
“You know, for $4 billion, we could do an awful lot. And you know where we could get $4 billion is by ending taxpayer subsidies we give to oil companies and gas companies,” President Obama said at a Democratic fundraiser in New York City Wednesday night.
“That’s profits coming from your pocket into their pocket. They’re making enough profit. We should be investing in the energy of the future, not yesterday’s energy,” Obama added.
Even Republican Speaker John Boehner (Ohio) suggested this week that oil-company subsidies would receive scrutiny.
"It's certainly something we ought to be looking at," Boehner told ABC News on Monday. "We're in a time when the federal government is short on revenues. We need to control spending, but we need to have revenues to keep the government moving. And they ought to be paying their fair share.”
Exxon — and the industry more broadly — are working to rebut the criticism.
“The U.S. oil and natural gas industry’s strong earnings signal growing strength in our economy. We should be proud of the success of an industry that supports 9.2 million American workers and 7.5 percent of our economy while also supplying income to millions of the nation’s retirees,” said Jack Gerard, president of the American Petroleum Institute, a powerful industry trade group.
“We need public policies that encourage development of our oil and natural gas resources at home, which will create good paying American jobs, contribute billions to the federal government, and increase our energy security,” he added.
But the liberal Center for American Progress is holding a call for reporters later Thursday that will take a very different view of the industry earnings.
The group parlayed the profits into a shot at GOP budget plans.
“As the first quarter profits from the big five oil companies roll in, so do the $40 billion in taxpayer subsidies to these already highly lucrative oil companies through the next decade — preserved in Rep. Paul Ryan’s 2012 budget by gutting $30 billion from Medicare,” the center said in an advisory previewing the call. Ryan (R-Wis.) chairs the House Budget Committee.
“While Big Oil rakes in windfall profit margins, they do nothing to ease the record-high prices facing American consumers at the pump and slowing our economic recovery,” the group added.