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Debate continues on Big Oil’s big profits

February 7, 2012, 2:23 p.m

The five so-called “super major” oil companies — Exxon Mobil, Royal Dutch Shell, ConocoPhillips, Chevron and BP— have just wrapped up their fourth quarter earnings reports, but not without inspiring disdain over how they made those billions in profits and over what they were doing with them.

Under the title “Big Oil’s Banner Year,” the Washington-based Center for American Progress on Tuesday, for example, pointed out that the five firms made a fourth-quarter record $137 billion in profits while producing less oil than they did the previous year.

The center said that the oil companies produced 15.6 million barrels a day in the fourth quarter compared to 16.2 million barrels a year earlier. The center also said that the oil giants were sitting on $58 billion in cash reserves while enjoying federal tax reductions they didn’t deserve.

“Instead of using their additional earnings to increase production or investment in alternative fuels,” the report said, the oil companies “used $38 billion, or 28% of annual net income, to repurchase their own stocks and invested in politicians to maintain the policies that led to their enormous profits over the past decade.”

The center also complained that the profits were reported during a year in which Americans paid the highest fuel bills on record for products like retail gasoline. The Center for American Progress’ data and its report can be found here.

But an official with the American Petroleum Institute said that Americans should be celebrating the same success, at least for Irving, Texas-based Exxon Mobil, San Ramon, Calif.-based Chevron and Houston based ConocoPhillips.

“When these companies do well, the tens of millions of Americans who have pension plans and 401(k)s that invest in oil companies also benefit,” said Rayola Dougher, senior economic advisor at the institute. “Over 97% of the ownership in these companies are in IRA accounts, pension plans, mutual funds, and individual investor accounts.”

Dougher said that California’s pension plans for public employees, for example, had about 4.4% of their investments in the oil industry between 2005 and 2009 and obtained a 17.1% return on them.

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Copyright � 2012, Los Angeles Times

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