Taking Aim at Oil's Riches

Even for Big Oil, the numbers have never been as big as this.

When major U.S. energy companies including Exxon Mobil Corp. and Chevron Corp. announce their third-quarter earnings in the next few days, the results are certain to be staggering.

Pumped up by soaring prices of oil, natural gas and gasoline in August and September, Exxon Mobil alone is expected to report quarterly profit of about $8.7 billion. That would be more than what such titans as Coca-Cola Co., Intel Corp. and Time Warner Inc. earn in an entire year.

For the energy companies, the record results amount to an embarrassment of riches -- an invitation for attack by foes and even by some traditional allies.

"The question increasingly is going to be, what is the industry going to do with this money?" said Amy Jaffe, head of the James A. Baker Institute Energy Forum at Rice University in Houston.

On Tuesday, House Speaker J. Dennis Hastert (R-Ill.) called on the companies to spend more to build refineries and boost production to help "ease the pain" of high energy prices.

"It's time to invest some of those profits," Hastert said at a news conference in Washington.

With oil holding above the $60-a-barrel mark, double the level of two years ago, some Democrats in Congress have another idea: Slap the industry with a windfall-profit tax like the one imposed in 1980.

Some consumer advocates, meanwhile, want Congress to mandate that a share of oil and gas earnings be plowed into alternative-energy research.

The sheer size of the industry's profit mountain makes it a tempting target. Together, the 29 major oil and gas firms in the Standard & Poor's 500 stock index are expected to earn $96 billion this year, up from $68 billion last year and $43 billion in 2003.

Yet the industry disputes critics who say it is failing to invest enough of that money to find new sources of oil and gas.

Energy companies will spend an estimated $86 billion on capital expenditures in the U.S. alone this year, the American Petroleum Institute says, citing Oil & Gas Journal data. That's up from $76 billion in 2003.

Exxon Mobil said its capital and exploration expenditures were projected to be about $17 billion this year, up from $14 billion in 2004. The company plans to spend $17 billion to $18 billion a year from 2007 through 2010, spokesman Robert Davis said.