Exxon Profits: 'Pumping Cash, Not Oil'

Exxon's 'Biggest Profit in the World' Is Actually Bigger; $8 Billion in
Unproductive Share Buybacks Should Be Counted, Says Group

Shell, No. 2 Oil Co., Also Hits New Record, But Hoards Less

SANTA MONICA, Calif., July 31 /PRNewswire-USNewswire/ -- ExxonMobil announced
the biggest quarterly corporate profit in history today, despite producing
less oil and despite stashing away $8 billion in buying back its own shares,
said Consumer Watchdog. The reported $11.7 billion 2nd quarter profit, if the
stock buybacks were all booked as after tax profit, would have neared $20
billion.

"The big oil companies are wallowing in cash and Exxon is the most aggressive
in buying back its stock -- instead of taking the risks it should to both find
new oil and develop new forms of energy," said Judy Dugan, research director
of Consumer Watchdog. "Consumers and government deserve a truer picture of
where their hard-earned gasoline and heating oil dollars are disappearing to."

ExxonMobil bought back $29 billion of its own stock in 2006, $28 billion in
2007 and has already bought back $16 billion in the first half of 2008. Even
so, it reports $39 billion in cash on hand and is all but certain to report
more than $40 billion in profit, along with $32 billion in stock buybacks, for
all of 2008.

"Exxon is pumping cash, not oil," said Dugan. "Its oil production continues to
drop, even after excluding political disruptions of supply. Exxon won't take
the risks or spend the money to produce new energy, even in areas where it
already has made deals or obtained rights."

For instance, Exxon refuses to help pay for a pipeline to transport plentiful
Alaskan natural gas that goes unused, demanding a better tax deal from the
state. It backed out of a deal with Qatar last year to turn natural gas into
diesel fuel. It spends nothing on production or development of renewable
energy.

"In a normal market, with prices for a product rising like they have for oil,
manufacturers would be spending like crazy to make more of it," said Dugan.
"Yet oil companies including Exxon would rather sit back and make more money
by selling less. Even if both U.S. coasts and the Alaska wilderness preserve
were handed to them, they'd just demand more tax breaks and not drill."

The result is that whole economies are stressed, consumers have emptied their
wallets and only Exxon benefits, said Consumer Watchdog.

Shell profit

Shell Oil, the world's 2nd largest oil company, also reported record profits
of $7.8 billion to $11.6 billion, depending on how the profit is recorded (the
smaller number more generally matches U.S. companies' accounting). Its stock
buybacks, however, were much smaller at $1.1 billion for the quarter.

Return on capital vs. percentage of revenue.

Unlike U.S.-based companies, Shell initially reports its profit percentage as
return on capital. Its 24.5% figure shows how profitable the oil business
actually is, said Consumer Watchdog. Exxon and others will initially spin
their profit as a percentage of revenue, a smaller and grossly misleading
figure. Last year, Exxon reported to major investors and the SEC that its
return on capital was nearly 32%.

As a recent AP story based on Pew Center research noted, the five biggest
international oil companies plowed about 55 percent of the cash they made from
their businesses into stock buybacks and dividends last year, while
investments in new oil have stayed in single digits.

"Oil companies are spiting the future for the sake of cash in hand," said
Dugan. "The companies' quarterly reports are a testament to management whose
sole focus is short-term profits, not a long-term energy future."

Consumer Watchdog favors the following reforms:

-- Robust U.S. oversight of all U.S.-generated energy trades, including limits
on purely financial trades between entities that neither sell nor receive
delivery of products;

-- Higher cost of trading for purely financial energy trades, allowing
entities that sell or receive oil and other products to continue hedging at
lower margins;

-- Reform of taxpayer subsidies to oil companies, including revisions of
royalty relief, with proceeds to fund renewable energy development and tax
rebates to low-income consumers;

-- Regulation resulting in a 30-day average national supply of gasoline
(current supply averages 21-23 days), with limits on regional variation of
supply. This return to the average levels of the early 1990s would reduce
price volatility in both gasoline and crude oil, reduce overall prices and
prevent price spikes in the event of supply interruption.

See Consumer Watchdog's "Oil Profits Monster," a database and charts of oil
companies' yearly profits since 2000, at http://www.oilwatchdog.org. The
database takes into account companies that merged after 2000, such as Chevron
and Unocal in 2005, to give the fairest picture of oil profit increases.

SOURCE Consumer Watchdog

Judy Dugan, +1-310-392-0522 ext. 305, cell +1-213-280-0175, or Tim Hamilton,
+1-360-495-4941, both of Consumer Watchdog