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In 2006, Exxon continued on its growth
path when it reported revenues of US$88.98 billion and
profit of US$8.40 billion for the first quarter. Though its
first quarter profit was lower in comparison to the fourth
quarter of 2005, it was up 7% over the first quarter of
2005. In April 2006, Exxon also announced payment of US$ 7
billion to its shareholders through dividends and share
buybacks. This payout was a 67% increase when compared to
the previous year.
However, despite the improved earnings results for Q1 2006
and a huge dividend payout to its shareholders, there was
not much enthusiasm among analysts and the general public.
While market analysts opined that the earnings were below
their expectations, the huge profits earned by Exxon made it
the target of US lawmakers and the general public. |
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Exxon’s profits came at a time when consumers in the US were feeling the
increased pressure of high gasoline prices, with prices touching US$3 per
gallon of gasoline. Jim Doyle, the Governor of Wisconsin, said, “Once again,
Exxon Mobil has reaped the largest windfall in U.S. history at the expense
of hard-working families. I hope that this news will finally convince the
U.S. Congress to take action and force the oil companies to give consumers a
refund.” 4
A few US policy makers called for an investigation of the high gasoline
prices and accused the big oil companies, including Exxon, of price gouging5
. U.S. Senator Byron Dorgan (Drogan) said, “There can be no more compelling
evidence that the price gouging and market manipulation which has produced
record oil prices is out of control, and is working to serve the forces of
individual greed and corporate gluttony at the painful expense of millions
of American consumers.”6
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[4] Deepa Bagington & Ben Berkowitz, “Record Profits Spark New Backlash
against Big Oil,” www.mindfully.org, January 30, 2006.
[5] Price gouging refers to the phenomenon of pricing above the market by
taking advantage of a situation where no alternative retailer is available.
[6] “Dorgan Calls ExxonMobil CEO’S $400 Million Retirement Package
“Shameful,” www.dorgan.senate.gov, April 18, 2006.
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