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Phil et. al.<BR>
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Let's review my comments regarding what oil corporations are doing "one heck of a lot better," as you phrased it, among the four corporations you listed in your comparison. Remember that my subject heading reads "Pemex Below Exxon & Chevron:"<BR>
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>From my post on 8/21/05:<BR>
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Phil wrote on 8/18/05:<BR>
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"PEMEX or Aramco are doing one heck of a lot better than Exxon or Chevron, because they simply own more oil and produce more oil than do the down streamers like the US oil <BR>
firms have become."<BR>
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"So who is 'making money'? The big winners are the top exporters, Saudi <BR>
Arabia, Russia and Norway and the big losers are the USA, Japan and China <BR>
since they import the largest amount of fuel." <BR>
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You are at least partly incorrect in your assessment that Pemex and Aramco are doing "one heck of a lot better" than Exxon or Chevron, depending on how you measure the complex set of variables involved. I am not sure why you say the "big losers are the USA..." To find the "big losers" in the USA in the world marketplace for oil profits we must examine the "big losers" among US based oil corporations, the problem being they are not such "big losers." <BR>
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<A HREF="http://www.energyintel.com/DocumentDetail.asp?document_id=111082">http://www.energyintel.com/DocumentDetail.asp?document_id=111082</A><BR>
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I merely said your comments are "partly incorrect..., depending..." The PIW rankings (available at the link above) I referenced, based on 2002 operational data, listed Saudi Aramco as the number one oil corporation in the world, and Exxon/Mobil number two, therefore the data I presented before does not contradict your assessment regarding comparing Aramco to Exxon/Mobil, and this at a time before the current spike in crude prices. I do think claiming that Pemex is doing "one heck of a lot better" than Exxon/Mobil is a major stretch, in 2002 or now in 2005, and this is what my subject heading focused on. Again, this depends on how you evaluate the status of a corporation, a very complex issue that results in disagreements even among financial experts. I will explore this in more detail below:<BR>
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The current record setting spike in crude oil prices will have effects that cannot be predicted precisely. Will crude oil prices come down by years end, go higher, or remain stable? We shall see.<BR>
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However, all I need to demonstrate to support my original claim that you are "at least partly incorrect..., depending..." is to reveal the most recent 2005 second quarter profit figures showing Exxon/Mobil "ahead" of Pemex. As far as these 2005 results demonstrate, I think it is false to claim that Pemex is doing "one heck of a lot better" than Exxon/Mobil.<BR>
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Here is a source for data on Exxon/Mobil's second quarter 2005 profits:<BR>
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<A HREF="http://www.washingtonpost.com/wp-dyn/content/article/2005/07/28/AR2005072802085_pf.html">http://www.washingtonpost.com/wp-dyn/content/article/2005/07/28/AR2005072802085_pf.html</A><BR>
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Exxon Mobil Corp., the world's largest publicly traded oil company, said yesterday that second-quarter profit rose 32 percent, to $7.64 billion, as Asia and North America used more crude oil and gasoline.<BR>
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The quarterly profit was the third-highest in the company's history. Revenue climbed 25 percent, to $88.57 billion, Exxon said. A doubling of oil prices since 2003 has put the Irving, Tex.-based company on a pace to surpass Wal-Mart Stores Inc. this year as the largest U.S. company by total revenue.<BR>
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Profit from worldwide oil and natural gas exploration and production operations jumped 28 percent, to $4.91 billion. Production decreased 4.3 percent, to 3.91 million barrels a day.<BR>
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The gap between crude oil costs and prices for refined fuels was the widest ever, as consumption rose faster than supplies. Exxon's refining and marketing profit rose 34 percent, to $2.02 billion, mostly outside the United States.<BR>
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Please focus on that last statement above: "refining and marketing profit rose 34 percent... mostly outside the United States." This reveals how multinational Exxon/Mobil's operations are, when they make more profit off refining and marketing outside the huge US market. This data supports my earlier point that was revealed from the PIW data from 2002 that a major strength of Exxon/Mobil is their number one position in refining capacity. <BR>
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And again, bolstering my claim that one of Exxon/Mobil's strengths as a company is their huge refining capacity, consider the following information:<BR>
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<A HREF="http://www.freerepublic.com/focus/f-news/1465359/posts">http://www.freerepublic.com/focus/f-news/1465359/posts</A><BR>
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Persistently strong refining and marketing margins also helped boost the company's bottom line. <BR>
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"Oil and gas production volumes (and earnings) were disappointing in the quarter, but this was offset by a now-familiar bonanza in the refining and marketing division - particularly in the U.S.," Credit Suisse First Boston analysts said in a research note.<BR>
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"A now-familiar bonanza in the refining and marketing division?" And this coming in the second quarter 2005, showing that the crude oil spike at this time is not slowing Exxon/Mobil's profits from refining and marketing, in part made possible by Exxon/Mobil's position as having the number one refining capacity in the world.<BR>
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Consider the comparison between the profit figures for Exxon/Mobil given above for "refining and marketing" at $2.02 billion, to the profit from "world wide oil and natural gas exploration and production" at $4.91 billion. This suggests, rather, if correct, it "proves," that the "upstream" side of Exxon/Mobil generates more profit than the "downstream" side.<BR>
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Now compare those results for Exxon/Mobil with data from the second quarter 2005 regarding Pemex's performance:<BR>
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<A HREF="http://www.latinpetroleum.com/article_4444.shtml">http://www.latinpetroleum.com/article_4444.shtml</A><BR>
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Mexican state oil monopoly Pemex posted a 14 percent rise in second-quarter sales as world crude oil prices hit new highs, though net profit slipped from the first quarter, which marked the end of years of losses.<BR>
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Pemex, 100 percent state owned and the government's main cash cow, reported a quarterly net profit of 1.9 billion pesos ($200 million) on Tuesday as sales rose to 221.3 billion pesos ($20.5 million), up 14 percent on the year.<BR>
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Exxon/Mobil had a second quarter 2005 profit of $7.64 billion, Pemex a second quarter 2005 profit of $200 million (1.9 billion pesos). However, this is very misleading, because Pemex is state owned and heavily taxed, resulting in their potential "profit" being absorbed by the Mexican government, with a 61 percent tax rate applied across Pemex's business.<BR>
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Still, Pemex's total sales in the second quarter 2005 were about $20.5 billion dollars (221.3 billion pesos), compared to Exxon/Mobil's total sales in the same period of $88.57 billion dollars. <BR>
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Exxon/Mobil's tax rate, as listed at the source below from Yahoo finance (form 10-Q for Exxon/Mobil), is around 41 percent, including income, excise and all other taxes and duties. Applying this rate to Pemex's operations for the second quarter 2005 reveals a loss of potential "profit" because of the Mexican government's high 61 percent tax rate, compared to Exxon/Mobil's 41 percent tax rate, of a little over $4 billion dollars, if I estimated correctly, that would greatly boost Pemex's bottom line, but would still fall far short of Exxon/Mobil's profit for the same period, at $7.64 billion.<BR>
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<A HREF="http://biz.yahoo.com/e/050804/xom10-q.html">http://biz.yahoo.com/e/050804/xom10-q.html</A><BR>
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This does suggest that Pemex minus the high taxes could generate more profit as a percentage of total sales than Exxon/Mobil, as it takes advantage of the crude oil price spike, but the huge size of Exxon/Mobil allows this multinational giant to generate substantially more profit as an absolute figure. Again, as I stated, "depending on how you measure," if you compare profits as a percentage of total sales, you will come up with a different ranking of corporate performance, than if you just look at the bottom line of total profit generated.<BR>
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I understand your point that primary suppliers of crude oil like Aramco and Pemex can make a killing off the current spike in crude oil prices, but consider the following data regarding Exxon/Mobil taken from the same source quoted above:<BR>
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<A HREF="http://www.washingtonpost.com/wp-dyn/content/article/2005/07/28/AR2005072802085_pf.html">http://www.washingtonpost.com/wp-dyn/content/article/2005/07/28/AR2005072802085_pf.html</A><BR>
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"Profit from worldwide oil and natural gas exploration and production operations jumped 28 percent, to $4.91 billion. Production decreased 4.3 percent, to 3.91 million barrels a day."<BR>
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Again I emphasize that a huge segment of Exxon/Mobils profits is from oil and gas exploration and production. Exxon/Mobil is not as much of a "downstream" company as it seems you are suggesting. In fact, the figure above reveals that over half of the second quarter 2005 profit Exxon/Mobil generated was from "exploration and production," with Exxon/Mobil decreasing production while still increasing profit, revealing they are making increasing profits off the crude oil price spike just as well as more "upstream" Aramco and Pemex.<BR>
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Again, I dispute that the "big losers are the USA..." in the global oil business, considering the second quarter 2005 performance of US based Exxon/Mobil that suggests this company is not a "big loser" compared to Pemex, given the "upstream" operations of Exxon/Mobil, coupled with their huge refining capacity, that are important factors in the financial equations involved.<BR>
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Consider what the USA generates in economic performance from imported fossil fuels. No doubt if all these fuels were domestic, our economy might be even larger and more successful than it is. But the US economy's number one position in the world is fundamentally linked to our number one position in the world in energy consumption. We generate tremendous wealth off the imported fossil fuel energy, and a significant amount of the wealth other countries make off our purchases of fossil fuels comes back into the US economy in investments. <BR>
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The Saudi's have invested 750 billion in the US economy, a significant amount of this wealth no doubt generated from sales to the USA, enough to give pause to anyone pondering the impact of disturbing the US/Saudi partnership. Consider that this relationship is under increasing strain recently, and the fact that 15 of the 19 9/11 terrorists are believed to have been Saudi nationals is part of the problem, with a major lawsuit pending against Saudi interests.<BR>
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Read the important story on this subject at this link below:<BR>
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<A HREF="http://news.bbc.co.uk/1/hi/business/2206522.stm">http://news.bbc.co.uk/1/hi/business/2206522.stm</A> <BR>
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"Saudis have reacted with anger to a lawsuit for damages filed last week by families of 11 September victims against Saudi banks and charities."<BR>
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Again, the data I gave earlier from PIW does not dispute the huge oil and gas wealth Saudi Aramco has under its wings, when PIW ranked Saudi Aramco number one ahead of Exxon/Mobil for 2002 operations. But I think you are incorrect to suggest that with the surge in crude oil prices that Exxon/Mobil is slipping in its global standing compared to Pemex.<BR>
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Exxon/Mobil is also taking advantage of the spike in crude oil prices to generate increasing profit, assuming the information I provided above is correct.<BR>
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We can perhaps review the 2005 oil corporation rankings and performance next year to see if Pemex is really doing "one heck of a lot better" than Exxon/Mobil at that time.<BR>
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Ted Moffett<BR>
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