Hmm. I just read that Exxon has just posted their largest profit ever. $36B for the last quarter!!!

What is that? Is it just me, or are we all being ripped off here. We are led to think that price of gas is high because of short supply, and higher costs to get the fuel. Yet Exxon has a $36B profit. Just doesn't seem right does it? next thing you know, Milk will be $10 a gallon.. Then farmers will be living in mansions because of record profits.

Just wanted to vent. Perhaps everyone should make every effort possible to boycott Exxon. Don't buy gas there. Get your gas from the other guys. While I am sure they are raking it in too, at least we aren't hearing about it...

No you misread - that is the annual profit...

The quarterly profit "declined" to 10.25B

could somebody with some GAAP knowledge tell me if R&D and exploration are figured in before profits?

I'm happy for Exxon/Mobil. My stepmother is a retiree from Mobil, and has a huge chunk of stock. This allows her and my Dad to not have to worry about the future. Please continue to buy your gas from Exxon so they can live in the style I think they deserve!

And I don't think that milk producers can do this, I believe there is some sort of FDA law that places limits on what they can sell milk for. This is nothing but supply and demand...

Anyone have any idea where the little Pop & Son businesses like "Joe's Gas & Service" get's their oil from?

In general exploration costs are expenesed as incurred as are R&D costs, but it's way complicated and much more involved for the oil and gas industries (I think there are entire semester courses on the subject)...

I did find this PDF file - it is from 2003 so I'm not sure how dated it is. But basically, there are different allowable methods for these industries

Oil and gas accounting

I pulled out the old intermediate accounting book and it discussus a depletion base when accounting for natural resources. This bases includes acqusition costs, exploration costs, development costs, and restoration costs. Again, that is in general, the oil and gas industries probably have special guidance.

Also noted in the footnotes..."Large international oil companies, such as Exxon Mobil use the successful efforts approach. Full cost accounting is used by most of the smaller companies. The difference in net income figures under the two methods can be staggering. It is estiamted that TExaco's full cost accounting increased reproted profits by $500 million over a 10-year period."

All that "educational stuff" is find and dandy. The bottom line is that Exxon had an annual PROFIT of $36 Billion Dollars!!!!

That to me is astounding. Especially while I pull up twice a week to my local gas station and pay anywhere from $2.20 and $2.75 for 1 gallon of gas.

Should we just bend over now?

Haven't we been bending over already?

I've never disagreed with you. I only posted that stuff because Ron asked if anyone knew how the oil companies accounted for things as per GAAP and I could not even begin how to explain. That's why I added the links and information - it has nothing to do with my personal opinion...

i'm sure there are many many doctoral dissertations on it.

and herein lies the rub: this is a politcal balancing act with capitalism. sure, it is smart to let business regulate and govern itself; it knows better how it works than anybody else. but this is also the problem: how else do you propagate a fraud right under people's noses without delving into the esoteric? now, i doubt this is tamanay (sp?) hall or anything like that, but at a certain point if fuel costs are burdening the public, it's not a bad thing to close some loopholes so that the fat aren't getting fatter.

Well you know...who cares if Exxon made close to $36,000,000,000.00? I'm sure this was only because of "the smarter and harder working folk" making more money, and that there was no possible price gouging or advantage taking of the little people by any means...

Ron - I continued to read a bit more in my book - and again there is a 2001 copyright so things may have changed - but I found this interesting also...(after going thru a timeline from the late 70s thru the 80s)

"Either the full cost approach of the successful efforts approach is currently acceptable. It does seem ironic that Congress directed the FASB to develop one method...and when the FASB did so, the government chose not to accept it. Sebsequently, the government (SEC) attempted to develop a new approach, failed, and then urged the FASB to develop disclosure requirements in this area. After all these changes, alternatives still exist in the oil and gas industry."

From the timeline it looks like accounting changes were being made constantly throughout the 70s and 80s, which I guess shows how complicated accounting for something such as this was/still is.

how much of that complication do you think owes to the industry trying to make the game as favorable as possible to them?

do you think oil lobbyists make a lot of money?

I haven't bought gas at Exxon since the Exxon Valdez spill in Alaska. Exxon did everything they could think of to not take responsibility and not have to pay for the clean-up. How do those guys sleep at night? I guess $36b will work just as good as Ambien.

steven, i'll be honest, i avoid exxon (and now mobil) as much as possible for the same reason. (though if i really need gas i'll go)

our nation has the largest consumer usage of oil. don't like how much you have to pay for gas? move closer to work. buy a bike. buy a better gas mileage car. carpool. take mass transit. no one os holding a gun to anyone's head and saying you have to buy the gas.

Smoothsailing - filling up 2 times a week? That seems excessive. What do you drive? I drive 450 miles a week to and from work, bought a small turbo-diesel that gets 52 miles per gallon. I have no issues filling up once a week.

I agree with Happy...I drive a 2000 Cherokee Sport...I knew what I was getting into when I got it...

I'm looking for something a little more "friendly", but I love my SUV.

I'll pay the $2.75 a gallon if I have to. I don't want to, but I made the choice to get a Jeep.

I just have a problem paying that much when the company is making $36,000,000,000.00.

but that is capitalism. I mean, do we really want to become like Russia and kick out the oil companies and nationalize the oil fields, thus making the Government in charge of how much oil we get and how much it costs.

Personally, if we could find alternate fuels...would we be complaining about Exxon right now?

wow, so just throw your hands up in the air like you do with dealing with islamic radicalism?

what's wrong with tweaking the system; closing some loopholes? why must it be black or white: pure capitalism or pure communism?

Ron...seriously...who pissed in your wheaties lately?

I'm not looking at it black and white.
I'm looking at it from a realistic stance.
With the hope that we don't need a 100% laissez-faire or 100% communistic government.

I like to look at things in a sensible, sober, pragmatic way.
If you don't like paying $2.75 a gallon, spending $80 to fill up...buy a more fuel efficient car. And yes, the oil companies are guilty of lewdness in their business practice, but until you prove to me that something illegal has been done, then I would just say the oil companies are vile in their practices, but not criminal.

You're really as bad as -J- sometimes, you know that?

i'd like to think i am as good as j is sometimes. i respect his analysis as much as i may ultimately disagree with it.

nobody pissed in my wheaties. this is how i am. i am the class clown but i am also a calculating philosopher. you are saying it is only realistic to allow pure capitalism or pure communism in this arena. i'm saying that the rules for taxation/accounting probably favor the well-lobbied industry. my realism says: grow some b@lls congress and do something about it. (it's hard to do that when your pockets and personal interests are being fed by the industry you are trying to regulate. it's called wagging the dog)

Time for you to actually pony up and answer a question for a change, ron-o. Tweak to what degree? Should all oil companies make +-10% of each other? Do we cap a profit limit and any profit over that amount are taken and distributed amongst the others, much like the NFL does with TV revenue?

Of course, this will lead to more creative accounting where companies will show a smaller profit to circumvent the system. Do you really want the government legislating what amount a company can make? Do you really want to go there?

Pony up ron-o. give an answer...you know you can do it...

Sorry to get off topic, but this thread reminded me I saw an interview recently with Laurie David (producer for 'An Inconvenient Truth'), and she was talking about the effort to get copies of the DVD to schoolteachers (the #1 comment she received at all of the screenings was that the film should be shown in schools). So, she approached the National Science Teachers Association; and after a series of e-mail communications received a 'No, Thank you.'

As it turns out, the National Science Teachers Association is funded in part by Exxon Mobile, and there's an Exxon Mobile executive on the advisory board. The NSTA declined to distribute the film because they were afraid it would conflict with their capital campaign...

well, i admit, i'm not one of those with dissertation in the economics or accounting of this industry. but there ARE people who do know. if they can do SOX (an absolute pariah but the returns are actually showing it is doing what it was meant to do), they can tweak this. my premise is that if they are profiting this much per quarter AFTER R&D-related costs, and the economy is hurt because the price of gas affects those with less money much much more than those with more AND because we can't really change america's transportation system (we can only mitigate the economics and enviromental effects), we can dial back the spigut from which the fat-cat oil people shower in profits.

I can't beleive I am saying this, but can Gasoline be viewed as a type of a commodity that society as a whole uses(i.e. electricity), and managed like a utility?

say it ain't so, becka!

(and actually, your comment is incredibly on-topic though people are going to bring up some michael moore backlash rebuttal, i can see it now...)