Exxon Mobil reports outsized profits
An Exxon gas station sign in Burbank, Calif.
Kai Ryssdal: I'll set up this next story by mentioning that oil closed at almost $113 a barrel today. Thus you won't be surprised when I mention that Exxon Mobil reported a quarterly profit this morning that topped $10 billion. Royal Dutch Shell came in at almost $7 billion. Chevron reports tomorrow.
When numbers like that come out, you know what tends to follow: politicians teeing up the evil-oil industry rhetoric and knocking it right down the fairway. Both parties do it. Except they're leaving one thing behind.
From the Marketplace Sustainability Desk, Scott Tong reports on oil politics and political mythology.
Scott Tong: Issue number 1: Big Oil is not who you think. Forty years ago, the Seven Sisters companies like Shell and Texaco lorded over 85 percent of world production. Now, the Seven Sisters are more like Seven Dwarves, compared to -- well, let's call them, "Big, Big Oil."
John Hofmeister: Such as Saudi Aramco or Gazprom.
Former Shell president John Hofmeister.
Today's behemoths are owned by governments, in Saudi Arabia, Iran, Russia and Brazil, and today they control most reserves while the multinationals hang at the kid's table.
Hofmeister: They're essentially locked out of state-owned oil company reserves, unless they are invited in.
U.S. firms also pay higher taxes then competitors, which takes us to Issue 2: tax breaks. President Obama wants to cancel some $4 billion worth. But Charles Ebinger at the Brookings Institution says brand-name oil companies don't get most of those preferences. Smaller drillers are far more dependent on subsidies and if they went away:
Charles Ebinger: I think you would see some degree of fall-off in domestic oil production and attendantly the loss of jobs in that particular part of the business.
Domestic production: Issue 3. Oil-friendly politicians want more drilling in the Gulf of Mexico, figuring that would push down American prices. Except that oil prices are set by global forces -- and the biggest is galloping demand in emerging countries.
Morningstar analyst Allen Good.
Allen Good: Even though we're producing oil here in the U.S., there's little we can do in the U.S. to determine what the Chinese are going to pay or what the Indians are going to pay or so forth. So if there's buyers elsewhere in the world, it's going to drive up U.S. gasoline prices.
He says politicians have few levers to pull on energy prices. That may be a fact, but in this town, facts can be overlooked.
In Washington, I'm Scott Tong for Marketplace.