High oil prices fuel ExxonMobil bumper profits

As Americans struggle to cover the higher price of gasoline, Exxon reported net income of $10.65 billion in the first quarter, a leap of 69 per cent from the year-ago period.

Even as Obama has vowed to strip oil companies of a $4 billion tax break, banner profits for energy companies were all-but-certain this month as Arab unrest this year drove oil prices toward the record $147 a barrel high set in July 2008.

ConocoPhillips posted Wednesday a 43 per cent rise in first-quarter profit to $3 billion. Chevron, the second-largest US energy producer, is set to report earnings Friday.

"Now investors get to digest the earnings report from Big Oil, and you will get to see why oil companies are easy targets from politicians, whether it is political chicanery or not," said Jon Ogg at 24/7WallSt.com.

Higher fuel prices are pressuring growth in the global economy and weigh particularly hard on the poor, as well as Americans struggling to recover from recession.

Chafing under gasoline prices that have climbed a dollar from a year ago to about an average $4 a gallon (3.8 liters) at the pump, consumers are complaining and politicians are listening.

Obama and potential opponents in next year's presidential election have pushed the issue onto the front burner.

On Tuesday Obama called on Congress to cut $4 billion in subsidies to profit-churning oil firms, as higher gasoline prices pressure his own political prospects.

"We have got a real problem here. Families day-to-day, they are driving to work. They are just watching their paychecks get whittled away. They need some relief," Obama told a Detroit television station.

Earlier the president wrote to Republican and Democratic leaders on Capitol Hill, urging them to eliminate "unwarranted tax breaks" to the oil and gas industry, and to reinvest in clean energy to cut US dependence on foreign oil.

But Republicans countered that Obama's budget prescriptions would in fact send gas prices even higher and reduce US domestic drilling.

The oil and gas industry has also warned that cutting tax breaks for exploration and subsidies will cost jobs at a time of high unemployment after the worst economic crisis in decades.

For ExxonMobil, the world's largest publicly traded company by market value, first-quarter earnings per share leaped 61 per cent to $2.14, beating the average analyst estimate of $2.06.

Revenue climbed to $114.0 billion, compared with $90.25 billion in the 2010 first quarter, missing expectations of $114.85 billion.

Shares in ExxonMobil, the biggest blue chip on the Dow Jones Industrial Average, fell 1.3 per cent to $86.65 in afternoon New York trade.

"ExxonMobil's earnings reflect continued leadership in operational performance during a period of strong commodity prices," Rex Tillerson, the company's chairman, said in the statement.

Capital and exploration spending climbed 14 per cent to $7.8 billion for the first quarter as demand booms, the Irving, Texas-based company said.

"We continue with plans to invest between $33 billion and $37 billion per year over the next five years to develop new energy supplies to meet future demand growth," Tillerson said.

In a conference call with analysts, the firm's head of investor relations, David Rosenthal, said: "Margins are firm... times are really good now and we're taking advantage of them."

However, he said that refinery volumes were lower due to normal maintenance downtime and "the tragic event" in Japan, referring to the March earthquake, tsunami and nuclear plant crisis.

"I can't tell you all our facilities in Japan are up and running full-board," but the company is working to bring back normal operations, he said.