Exxon Records Biggest Profit in US History, on Eve of Possible Recession

The Olympics are coming up, and excepting the host country—China—for risking the reputation of hosting the 2008 Genocide Olympics, all kinds of records will be set. Today, other accomplishments are gaining headlines. ExxonMobil, the world's largest corporation reported the biggest profit in the history of the United States: $11.06 billion.

That is tough to top, in any regard. The first, and obvious question: why, then, are gas prices still high? Click the image to the right to watch Jim Lehrer ask Chevron Corporation's Peter Robertson exactly that question. Chevron, while it fell short of ExxonMobil's record this quarter, itself set a company profit record.

"Over the last five years, we've earned $53 billion. And we've invested $53 billion," Robertson said. "Now, the precise number is a coincidence, but it's a fact. So, we invest. And, prices are going up. That tells us the market is saying we need more investment. We need more supply. Prices go up, we have more money to invest, we invest it, and hopefully that will bring on the supply over time."

Often, the word used to describe you or I at the short end of the pump, conveniently left out of Robertson's explanation here, is gouged. In general, the only people making more money in the United States than the oilmen are big-time bankers. Energy and money are the ones across the country making the windfall.

Only, this simple picture may soon grow far more complicated when you look at them both at the same time. As it turns out, Wall Street bankers have stuck a whole lot of wrenches in the country's economic gears. Subprime mortgages could be dragging the country into a recession. Say, for a moment, that the developing world doesn't keep US growth afloat. Americans lose houses, savings, and the extra wallet cash that makes $3.05 a gallon doable.

Oil companies do as they may—government doesn't regulate gas prices, after all, it taxes them, yes? At the same time, then, let the tens of billions go into, as Mr. Robertson explains it, reinvestment into the oil industry. Because, looking further down the line into the latter half of the 21st century, surely there's a future in driving around gas-guzzling vehicles with the passenger and back two seats empty, right?

"Supply over time," as Robertson says, may be a goal, but he knows, as we do too, at least according to the federal Government Accountability Office, that time is running out.

The last five years of ExxonMobil's stock price, roughly the time of the Iraq war:

(Chart from Yahoo!.)

From Houston to Luanda, First Class Oil

The demand in Luanda, Angola, for oil and gas lawyers is apparently on the up and up. Despite the fact that it is 7,644 miles from Houston to the capital on the southeastern coast of Africa, according to a report by Mary Flood in the Houston Chronicle, oilmen are now being accompanied three times a week on a direct flight.

Angola, a country of 16 million, had been ruled by the Portuguese since the 15th century and was left in shambles when the Europeans went running home after a socialist-inspired coup toppled the government in 1975. The country's long coastline could have been a valuable asset to the freed Angolans, but war ravaged the country. Only lately has the economy begun to grow, spurred by two unsurprising developments.

First, the country has oil reserves. It joined OPEC in 2006 and currently outputs about a 1.5 million barrels a day. That is expected to rise to 2 million. Second, China, as it has in much of Africa, in 2004 invested $2 billion to build the country's infrastructure. As usual, the money came as a line of credit, to be paid with future oil deliveries.

There is plenty of room for development: UNICEF reports that life expectancy in 2005 was just 41 years.

Return your seats to their full and upright position. The flight is run by World Airways and Angola's Sonair. Tickets come by invite only. According to Flood's report, traveling from Texas would otherwise take more than two days. 15-hours nonstop is a nice perk.

In fact, just today Houston-based Marathon Oil Corporation announced a deep water discovery off the coast.

Here's a suggestion for the oil industry workers and lawyers hopping on that flight. Ditch the in-flight magazine and read up on how the oil industry mucked up the Nigerian delta. Private flights don't seem that big a deal, but if anyone remembers the wretched history of Shell oil in Nigeria, bad business doesn't make for good industry, and the Chinese laboring away on roads and bridges may have the upper hand in this one.

(Image from Robert P. Byrne's flickr.)