Those Record Oil Company Profits

With memories of long gasoline lines still fresh, the earnings reported by many od companies last week could hardly be expected to be greeted by cheers. All told, the industry had its best second quarter ever. Profits of the 23 biggest U.S. firms totaled $5.47 billion, a rise of 66% over the same period last year. Among the five large international companies, Texaco's earnings leaped by 132% to $365 million. Earnings of the others: Exxon, up 20% to $830 million; Mobil, up 38% to $404 million; Socal, up 61% to $412 million; and Gulf, up 65% to $291 million. These gains came on top of strong earnings in the first quarter. For the first half, the combined profits of the five giants came to $4.6 billion, or an increase of 49% over the same period last year.

While the companies' earnings are indeed up sharply, they seem especially large because the percentages represent comparisons with the first half of 1978 when profits were soft as a result of a worldwide oil glut. But there is no doubt that the companies have reaped a bonanza from the 60% runup in OPEC prices since January. For example, about 30% of U.S.-produced oil is, in effect, uncontrolled When world oil prices go up, the price of this uncontrolled crude rises right along them. But the companies assert that most of their profits come from operations overseas, where no price restrictions apply.

The Administration is sure to cite the high earnings in its campaign to get Congress to pass a tax on the "windfall" profits the companies stand to receive under Carter's plan to decontrol the price of domestically produced oil Carter last week urged Americans to "let their voices be heard" against "an oil lobby working quietly" against the tax. While the public fumes at the big profits, most experts have defended the high earnings claiming that they finance further exoration. In any case, the profits boom is temporary: soon demand will come ore into line with supply, prices will stabilize and the rise in earnings will ease

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